BULLETIN 



OF 



THE UNIVERSITY OF TEXAS 



NO. 355 
SIX TIMES A MONTH 



EXTENSION SERIES NO. 60 



AUGUST 25, 1914 



CO-OPERATION IN 

AGRICULTURE, MARKETING, 
AND RURAL CREDIT 



BY 

CHARLES B. AUSTIN 

AND 

GEORGE S. WEHRWEIN 

Division of Public Welfare, Department of Extension 




PUBLISHED BY THE UNIVERSITY.OF TEXAS 
AUSTIN, TEXAS 

Entered is second-class mail matter at the posioffice at Auetin,'Texat 



^^?»fJi? 



540-714-20m-G0l»8 



BULLETIN 

OF 

THE UNIVERSITY OF TEXAS 



NO. 355 

SIX TIMES A MONTH 



EXTENSION SERIES NO. 60 



AUGUST 25, 1914 



CO-OPERATION IN 

AGRICULTURE, MARKETING, 
AND RURAL CREDIT 



CHARLES Br AUSTIN 

AND 

GEORGE S. WEHRWEIN 

Division of Public Welfare, Department of Extension 




PUBLISHED BY THE UNIVERSITY OF TEXAS 

AUSTIN, TEXAS 



Entered as second-class mail matter at the postofTice at Austin, Texas 



S57?. 

.Pit 



The benefits of education and of useful 
knowledge, generally diffused through a com- 
munity, are essential to the preservation of a 
free government. 

Sam Houston. 



Cultivated mind is the guardian genius 
of democracy. ... It is the only dictator that 
freemen ;^:cknowledge and the only security 
that freemen desire. 

Mirabeau B. Lamar. 






<N CONTENTS 

f4 Department of Extension 4 

Introduction O 

CHAPTER I. 

CO-OPERATION. 

I. Success and Failure 11 

II. Reasons for Success 15 

ITT. Types of Farmers' Organizations 2& 

IV. Essentials to Success in Farmers' Organizations 33 

V. What is True Cooperation 37 

CHAPTER II. 

HABKETIXG. 

I. Introduction 43 

II. Crops and Values 44 

III. Grain 46 

IV. Hay and Feed 47 

V. Corn 50 

VI. Live Stock 51 

VII. Dairy Products 53 

VIII. Poultry and Eggs 55 

XL Fruit, Truck and Vegetables 57 

X. Cotton 65 

CHAPTER III. 

RURAL CREDIT. 

I. Introduction 71 

II. Nature of Capital 71 

III. Why Should FarmervS. Borrow (?) 72 

IV. A Low Interest Rate . .' 74 

V. Farm Loans in Texas 76 

^'T. Farm Mortgages in Texas 79 

VII. Jewish Farmers' Cooperative Credit Unions 83 

VIII. Catawba Rural Credit Association 87 

IX. How to Form a Cooperative Credit Union Under the Texas Law. 91 

Bibliography 96 



DEPARTMENT OF EXTENSION. 

OiTlCERS OF AD-MINISTRATIOX 

Sidney Edward Mezes, Ph. D., President of the University, 
F. M. Bralley, Director of the Department of Extension. 
Sam C. Polk, Secretary to the Director. 



Division of Correspondence Instruction. 

L. W. Payne, Jr., Ph. D., Head of the Division. 
W. Ethel Barron, Eegistrar. 

Division of Public ]y el fare. 

Charles B. Austin, M. A., Head of the Division. 

George S. Wehrwein, B. S., Specialist and Lecturer on 

Cooperation. 
W. A. Schoenfeld, B. S., Specialist in Farm and Coopera- 
tive Accounting. 

Division of Piiblic Discussion. 

E. D. Shurter, Ph. D., Head of the Division. 

A. J. EoBiNSON, B. A., Lecturer and Athletic Organizer. 

Marian Edith Potts, B. A., Package Librarian. 

Division of Home ^y el fare. 

Mary E. Gearing, Head of the Division. 

Jessie P. Eich, B. S., Lecturer on Domestic Economy. 

Edith Allen, B. A., Lecturer on Domestic Economy. 

Division of Puhlic Scliool Improvement. 

E. V. White, B. S., Head of the Division. 
Edward E. Davis, B. A., Lecturer. 
Amanda Stoltzfus, L. L, Lecturer. 

Division of Public Lectures and Publicity. 

John A. Lomax, M. A., Head of the Division. 

Division of Child Welfare. 

A. Caswell Ellis, Ph. D., Head of the Division. 
N". L. Hoopingarner, B. A., Assistant. 



I. THE DEPAETMENT OF EXTENSION 

Purpose. Every university should serve not only its resident 
student body but also the entire community. This is true in a 
l^eculiar sense of a state university; su^Dported as it is by the 
tax^es of all the people, it is under business obligation to render 
))ack service to each citizen and to the commonwealth. In a 
general sense a university fulfills this obligation by sending edu- 
cated young men and women back into their home communities 
to carry with them the culture of a broader outlook; the skill ac- 
quired through professional training as lawyers, teachers, doctors, 
nurses, home-makers, business men; and especially the inspiration 
to unselfish service as citizens that is the intangible and. priceless 
asset of university life. 

Taking the University to the People. This indirect contact 
with the whole people of the State is, however, not sufficient. The 
constant aim of the President and Eegents has been to broaden 
the scope of the University of Texas with the broadening interests 
of the State, and to bring its benefits within the reach of as many 
individuals as possible. In 1898 the Summer Schools were opened 
and have been maintained each summer since for the convenience 
of students who are unable to attend the long session, especially for 
the teachers of the Texas schools whose professional work fills the 
winter months. As a further step toward making the University 
directly useful to large numbers of people who are unable to at- 
tend the classes of either the long or the summer session, the De- 
partment of Extension was established four years ago. This De- 
partment has developed rapidl}^, and its work is now carried for- 
ward under seven divisions as follows : 

The Division of Public Welfare. It is the purpose of this 
division to go into the field and investigate the economic and 
social conditions in the State, with a view of collecting such re- 
liable data as may present a basis for intelligent efforts at improv- 
ing such conditions. It is hoped that through this Department 
the citizens of the State may have the advantage of unbiased Uni- 
versity experts, wlio can come to them and advise with them when- 



<} Bulletin of the University of Texas 

ever they wish to plan any economic and social movement. The 
time of one or more i^ersons will be devoted to the various prob- 
lems of rural economy, sanitation, social life, finance, marketing 
and kindred subjects. 

The Division of Public Discussion. This division has for 
its purpose the encouragement and intelligent direction of public 
discussion and debate, and athletics both in schools and out of them. 
Bulletins have been issued giving advice regarding the organiza- 
tion of debating clubs, and furnishing lists of references for read- 
ing and preparation for del)ate on a iiumber of topics. Loan li- 
braries on important subjects, such as prohibition, woman suffrage, 
initiative and referendum, piison reform, compulsory education, 
the commission form of city government, municipal ownership of 
public titilities, and the tariff and free raw material, have been 
prepared and are being loaned to such clubs and individuals as 
request them. The University Interscholastic League has been 
:successfully organized, and it is the hope of this division to assist 
in developing the school as a social center through which the com- 
munity may become lietter informed. County organizations be- 
longing to the League hold annually county contests in debating, 
declamation and athletics. Every school in Texas should be in- 
, terested in this work, and a League should be organized in each 
•county. Upon request the Constitution of the League, together 
with bulletins and other information, will be mailed. 

The Division of Home Welfare. Tlio division deals specifically 
with all problems relating to the home, and exists primarily for 
the benefit of the home-maker and with a view of placing the home 
on the same intelligent and prosperous basis which characterizes 
other progressive institutions. Lecturers and demonstrators will 
attend fairs, county educational rallies, and make a limited num- 
ber of engagements through the medium of women's organizations 
to give specific instruction on subjects of vital interest to the home. 
Bulletins will be issued frequently on matters pertaining to the 
home and may be had on application to the Department. Ques- 
tions will gladly be answered at any time on matters pertaining to 
the welfare of the home. Further information may be o1)tained 
by writing to the division. 



Cobperation in Agricnlture, Marheting, and Rural Credit 7 

The Division of Public^Schooi Improvement. Tliis division 
lias in charge tlie various educational exhibits sent out by the Uni- 
versity to the fairs and other large gatherings, to call to the atten- 
tion of the people certain needs of Texas and to point out the most 
intelligent methods of meeting these needs. These exhibits cover 
such vital subjects as school buildings and school hygiene, plays 
and playgrounds, use of schools as social centers, medical inspec- 
tion of schools and care of the feeble-minded. Information on 
miscellaneous subjects is furnished through the cooperation of 
men in the faculty who have expert knowledge in their various 
fields. Eeady-madc lectures, accompanied by slides, are sent out 
to responsible peojjle who are attempting local improvement. 
Short, practical bulletins. have been prepared on many such timely 
subjects as AVholesome Cooking under Eural Conditions, Beautifi- 
cation of Home and School Grounds. Pamphlets hav^ also been 
issued on One and Two-Eoom Eural School Buildings, Three and 
Pour-Eoom Eural School Buildings, Eemodeled Eural School 
Buildings. These contain full detailed drawings and detailed 
architect's specifications. As its title indicates, the activities of 
this division are diversified. The aim of the division is to he 
useful in the homes and in the schools of the State, and to this 
•end correspondence with communities that desire its cooperation 
is invited. 

The Division of Public Lectures. In the Division of Public 
Lectures the University undertakes to provide competent, trained, 
and impartial speakers, chiefly from among its faculty, to present 
to the people the great questions of the day, and interesting 
phases of literature, science, and art. It is by no means the 
purpose of these lectures to be merely amusing; the attempt is 
made to present in a popular and attractive form a definite amount 
of reliable instruction. A special bulletin setting forth the avail- 
able lectures has been prepared and will be sent upon application. 

The Division of Child Welfare. The Division of Child Welfare 
investigates local conditions affecting children, and assists in plans 
for bettering tlie conditions affecting childhood. The hygienic 
and sanitary conditions of 'Schools hare been given much study, 
and through bulletins, letters, and lectures lielp is given to school 



8 Bulletin of the Unlversiiij of Texas 

boards in planning new schoolhouses and in remodeling old ones 
to make them more hygienic. The feeble-minded and delinquents 
have been studied and assistance given in drafting laws to care bet- 
ter for them. Numerous other studies will be taken up as rapidly 
as funds are made available. A psychological clinic will next year 
be established at the University to which abnormal, or atypical, 
children may be brought for diagnosis. At present the division 
gives free advice by mail on any matter pertaining to child wel- 
fare. 

The Division of Correspondence Instruction. Teaching by cor- 
respondence has long since passed the experimental stage. While 
the University recommends resident work when residence is pos- 
sible, believing that the experience of meeting' and mixing with 
fellow students and the consequent training in real democracy as 
well as thS personal contact with and inspiration from the teach- 
ers, is invaluable, yet the authorities of the University also realize 
that correspondence study offers substantial advantages. In cor- 
respondence instruction the teaching is entirely individual; each 
student, no matter how diffident or how lacking in aggressive- 
ness, comes into individual relation with the instructor in a way 
impossible in the crowded class-room. He recites the whole of 
every lesson with a consequent advantage to himself that is ob- 
vious. Full opportunity is given to discuss all difficulties in writ- 
ing, and this written discussion in itself affords valuable train- 
ing. Further, a correspondence student is not hampered by the 
usual time regulations ; he may take up a study at his conveni- 
ence without awaiting the fixed date of a college term, and he 
may push the work to completion as rapidly as he is able to 
master it. Moreover, correspondence work develops in a marked 
degree initiative, self-reliance, accuracy, and, above all, perse- 
verance. 



INTRODUCTION. — 

The Division of Public Welfare of the Department of Exten- 
sion of the University of Texas was established for the purpose 
of assisting the people of the State in their study and solution of 
the economic and social problems which confront them. While 
there might be some question as to what the greatest problems 
are, there is no doubt that our State is classed as an agricultural 
State, that the majority of our people are rural people and that 
the problems of farm life are the problems which confront the 
most of the people. Viewed in an indirect way, we may say that 
the problems of the farmer are the problems of all the people. 
Upon his success depend the vitality, the ability and the progres- 
sion of the State. 

Realizing the importance of a sound and healthy growth and 
condition of agriculture, the Division has devoted most of its at- 
tention to farm life. The Avork has been grouped around what 
may be spoken of as the Business Side of Farming. Among the 
subjects that have received -attention are mortgages, tenancy, cost 
of production, farm book-keeping, cooperation, marketing and 
rural credit and financial conditions. 

During the past year one member of the Division has been a 
Collaborator wjth the United States Department of Agriculture, 
and we gladly note here that much of the material upon which 
this Bulletin is based has been gathered in cooperation with the 
Federal authorities. 

One writer of this Bulletin represented the University of Texas 
as a member of the American Commission for the study of Euro- 
pean Systems of Agricultural Cooperation and Credit. We pos- 
sess, therefore, abundance of material, in many different lan- 
guages, upon what has been done by the European farmer. In 
the preparation of this Bulletin we have ]n"ef erred to use our 
illustrations from what has been done or is being done in our 
own country. If, however, any of our readers desire further in- 
formation or the use of any material in our possession it will be 
furnished for the asking. 

Both writers liave either farmed or studied the problems of the 
farm and the market in three different States besides our own, 




10 Bulk'tin of Ike University of Texas 

but here again we have tried to draw our examples from Texas 
conditions. We must learn that in our own State there are those 
who are successfully meeting some, of the most perplexing 
problems. 

We also acknowledge the cooperation of our own State Depart- 
ment of Agriculture. Commissioner Kone has assisted us in 
many ways. We believe that the Proceedings of the First Meeting 
of the Southern States Association of Markets published by his 
Department should be read by every farmer in the State. We 
have usually given credit wherever we have used material from 
the agricultural papers and state press. Without naming any, 
the Division is glad to thank them all for assistance received. To 
name the individuals who have cooperated with us is impossible, 
unless we add another chapter. We are indebted to the thou- 
sands who have handled our correspondence and the hundreds 
who have talked to us or written us. We hope that we may in 
this manner repay a part of our obligations. We are not trying 
to send you a formal book but a IjuUetin in which we have tried 
to profit you and tli(» man in the other section of the State by. 
putting your opinions and your experience alongside of his. This 
is the beginning of cooperation. 

In tlicse few pages you may again find a part of the message 
which you have heard from us l)y word of mouth, for during the 
past year we have visited- fifty-eight different counties and have 
discussed these questions of Cooperation. Marketing and Rural 
Credit with more than forty thousand people. 

It is not in the preparation of bulletins like this nor in mere 
discussion and lecture that we expect to Ijest serve the people of 
Texas. Bulletins and lectures are means to an end. That end 
is a revival of rural life, by making rural life attractive both 
socially and financially. It can he made so by cooperation, and 
we are ready and willing to aid, cither liy printed page on^ per- 
sonal visitation, wherever a community has a cooperative move- 
ment under consideration or in the actual process of formation. 

Charles B. Austin, 
George S. Wehrwein. 



CHAPTER I 

COOPERATION IN AGRICULTURE 

SUCCESS AND FAILURE 

The word cooperation as it is generally used means simply get- 
ting together to carry out some definite object. In this loose 
way farmers are said to cooperate if they get together to form 
an ice-cream club, if they unite to build a new church, or carry 
on such large business enterprises as the California Citrus Fruit 
Growers are doing. In ' order to avoid confusion the term ought 
to be applied to purely business organizations and then only to 
those which are organized according to the definitions of a purely 
cooperative enterprise as defined by law. 

Failures in Cooperation 

In the United States all farmers' business organizations are 
usually said to be "cooperative." As a result the hupdreds of 
farmer stores and other organizations that have failed for one 
reason or another are looked upon as failures in cooperation. 
Sometimes cooperative Imsiness organizations have been made a 
part of a communistic scheme and, although excellently managed, 
failed with the scheme with which it was tied up. Somehow the 
word itself conveys the idea that the business that bears the name 
^^cooperative" is one that is difl^erent from the usual enterprise — 
that it is of a broader and more philanthropic nature. For this 
reason many unscrupulous business firms have adopted the term 
and used it either in their titles or their advertising, hoping to 
attract the farmer or workingman. So today, when the average 
farmer is approached by some one with cooperation, he recalls 
the failures, the swindles, and schemes that have l)een ]iromoted 
under this name and naturally steers clear of them all. 

The high cost of living and the question of better farm busi- 
ness, however, have brought cooperation prominently before the 
public during the past few years, and today many people think 
they see in it the panacea for all the economic diseases society is 
heir to. The city consumer hopes to sec the high cost of living 



12 Bulletin of the UniversUi/ of Texas 

reduced "if farmers would only cooperate." Together with the 
farmer he complains that there are too many middlemen in the 
system and wants them eliminated, but the only way to "elim- 
inate" the middleman is for both consumers and producers to 
take upon tliemselvcs the responsibility of the marketing process 
and perform the middleman's service more efficiently than he is 
performing it. Some want to go a step further and have the 
national or state governments take over the whole situation and 
become the marketing agent and the money lender of the farming 
class. But for the same reasons the government would have the 
right to take over manufacturing and transportation as well as 
distribution. Farmers as a class need to feel that they can stand 
on their own feet. 

The thinking farmer knows that cooperation cannot be such 
a panacea. Friends of the movement feel that this blind faith 
is a boomerang to be feared. Many enterprises built on this wave 
of* popular feeling will die and will thus leave true cooperation 
with more failures than ever to its name. Therefore, the farmer 
who studies the subject will learn to build better by studying the 
mistakes and failures of the past; on the other hand, he will not 
be misled by the phantastic expectations of enthusiasts. 

Success in Europe 

The widespread interest shown by Americans in cooperation 
culminated in the trip made by the American Commission to 
study the organizations of European farmers. Its findings and 
the evidences have been published as Senate Documents Xos. 214 
and 261 and cover a total of about one thousand pages of publi- 
cations the size of the Congressional Eecord. 

The reader of these publications is impressed with the success 
of the movement in Europe. It is astonishing to see the extent 
to which European farmers carry on their business coopera- 
tively. Equally astonishing is the variety of their enterprises. 
Statistics for 1909* show that Germany had over 22,000 coopera- 
tive organizations, of which 15,000 were rural credit societies and 
over 3700 were creameries. The farmers cooperate in the manu- 
facture of their luitter. They purchase their feeds, groceries, 

*Tasph(>nhuf'li fiir Lnndwirtschaftliche Gonossenscliaften. published by 
tho TvPiehsverbniid dir dciitsclion bmdwirt. noiioss. (Darmstatt. 1010.) 



Cooperation in AgrivuUnre, Marketing, and Rural Credit Vo 

machiiU'iT, fertilizers and sell their hay, grain, cattle and eggs 
through their farmers' organizations. They own their ware- 
houses, slaughtering houses and grist mills. They have mutual 
insurance companies, breeding associations and even potato dry- 
ing associations. The little farm villages are often supplied with 
water by cooperative waterworks and lighted by electricity pro- 
duced by their own electric light plant where some rushing brook 
can be harnessed. In Belgium the Maisson du Peuple own its 
bakeries, tailor shops, moving picture houses and drug-stores. 

Denmark's chief products — bacon, butter, and eggs — are pro- 
duced, concentrated and^ exported by the farmers themselves. 
England's wonderful stores and Ireland's rapid progress in but- 
ter and egg production owe their success to cooperation. 

The following table is taken from the second Year Book of 
International Cooperation (1910) and shows the strength of the 
movement throughout the world : 

International Summaries — Statistics of Cooperative Societies 

A "Pnrnnp • No. of No. of Inhabitants 

.ji. i^LiiupK. Societies to one Society 

Austria 16,563 1,725 

Belgium 2,270 3,282 

Bulgaria 727 5,551 

Denmark 5,033 51-1 

Finland 1,929 1,5&5 

France 10,983 3,578 

Germany 30,555 . 2,12-1 

Hungary 6,000 3,473 

Italy .] 7,561: 4,569 

Netherlands 2,679 2,184 

Norway 3,078 777 

Roumania 2,904 2,051 

Russia 16,000 5,840 

Servia . 1,252 2,148 

Spain 274 71,909 

Sweden 2,100 2,607 

Switzerland 7,827 481 

United Kingdom 2,500 18,086 

Japan 5,149 10,048 

United States 500 183.940 



14: Bulletin of the Universitij of Texas 

In co-niparing the diflferent countries, interesting facts are 
brought out. Even little Bulgaria is credited with 727 associa- 
tions and Japan with 5,149. The United States has only 500. 
This is due to the fact that the figures for the United States are 
for 1905 .and since then the cooperative societies have made great 
strides forward. Secondly, the note accompanying the table says 
that it "has been difficult to obtain information as to the present 
development of cooperation in ISTorth America. The unions at 
present existing do not compile statistics and the returns with re- 
gard to cooperation published by the statistical offices are very in- 
complete." This accounts for the comparatively low figures for 
the United States. 

In the Year-Book of the Department of Agriculture, for the 
year 1913, Dr. T. N. Carver, in his article on the '^'Organization 
of Rural Interests," lists a total of 1867 farmers' mutual insur- 
ance companies, 2165 cooperative creameries, 336 cooperative cheese 
factories, 2020 cooperative elevators, which alone is a total of 
6388. There are hundreds of purchasing societies and marketing 
organizations, stores, cow-testing associations, and breeders' asso- 
ciations which he does not mention at all. This shows that there 
are certainly more than 500 cooperative associations in the United 
States. He adds, however, "The question often arises as to 
whether these are all strictly cooperative. Undoubtedly many of 
them are, in form at least, merely joint stock companies, and not 
cooperative in the strict technical sense. Such a claim, however, 
is based upon the letter rather than the spirit of the enterprise." 
(For a discussion of cooperative vs. joint stock enterprises, see 
later in the chapter.) This table, however, is limited to strictly 
cooperative societies and, therefore, does not list many of the 
associations that Carver has enumerated. 

Many will dismiss such comparisons with, "0, well, conditions 
are different over there. Their laws, governments, and customs 
permit of cooperation, but it won't work in the United States." 
Some even say that cooperation is suited only to monarchial gov- 
ernments and, if we introduced it here, our own people would be 
reduced to peasants lorded over l)y aristocratic landlords. But 
the principles of cooperation hold true all over the world. If it 
has been the salvation of the European farmer, it will do much' 
for the United States. There is no use arguing that '"'conditions 



Cooperation in Agriculture^ Marl-etiiiy. and h'ural Credit 15 

are different." Some so-called "conditions" need changing and 
uprooting. It is no use plowing around these stumps any longer. 
We had better blast them out — get rid of them ! Some funda- 
mental differences remain and we will plow around these for a 
while. Cooperation can be adapted to these conditions. 

Reasons for Success in Cooperation 

It would not be fair to compare Europe with America in the 
matter of cooperation without saying something about the differ- 
ences between the two continents. 

Permanent Settlers 

Europe has been settled for centuries. America is new and our 
people have not been permanent settlers. Some 23 per cent of our 
people do not reside in their native state. Thirty-seven per cent 
of our farmers do not own their farms, hut rent them and are 
here one year and on a different farm, and perhaps in a different 
county the next year. In Texas 52.6 per cent of our farmers are 
renters, and the problem is still greater. Teachers tell us that it 
is not uncommon to have 25 per cent or more of their pupils 
change during the moving season, and some schools are almost 
depopulated. It is not uncommon to find that people will not 
know neighbors living within a mile of their house, even though 
these people have lived there a year or more. Not knowing each 
other, people have no interest in their neighbors and how can we 
expect them to go into business organizations and risk their money 
in a venture with people they know nothing about? 

Many Nationalities of United States 

Our people are of many nationalities and it is hard to get peo- 
ple of different habits, traditions and customs to act together. A 
German citizen of Texas said, "As long as you keep the farmers' 
organization among Germans it is going to succeed, but as soon 
as you admit people of other nationalities it is going to fail." 
This is not because the Germans are so much better adapted to 
working together, but because different peoples won't "mix." 



16 BiiUetin of the University of Texas 

Prosperity and Extravagance 

On the whole, the Aiuehcan people have been unusually pros- 
perous, and this is also true of the farming people. We have had 
a whole continent thrown open to us with seemingly inexhaustible 
resources of forest, mineral and agricultural wealth. And up to 
a few years ago no one thought of "conservation," but only ot 
"development," "exploitation" and "opening up the country." 
Our governments, state and national, have treated these natural 
resources in this light and have opened the door to any one who 
would "develop." Our prosperity has made us feel that we do 
not need to work together. Mr. Fay, the noted English writer on 
cooperation, says: "A cooperative society is an association of the 
weak who get together in order to lift themselves and others out 
of weakness into strength."^ When people do not feel that they 
are weak, they are not likely to feel the need of mutual organiza- 
tion. One farmer from Kendall county writes: "I know of no 
way you can be of any assistance to the farmer — I mean the pro- 
gressive farmer. He is on to his job, and gets all he is entitled 
to." A speaker at the first Conference on Marketing and Farm 
Credits in Chicago (1913) said: "I have had some experience 
in organizing cooperative associations, and I remember well talk- 
ing with one German farmer — he happened to be German — others 
are largely the same. I drove from farm to farm, to influence five 
or six men to go into an organization. I tried to explain to this 
man ; I talked hard and earnestly to him, and when I finally 
thought he was going to become a member, he said to me : 'Well, 
I made two thousand dollars last year; I think that has been 
enough.' "- 

In Europe things have been different. The land has been 
farmed for hundreds of years, the population is denser and more 
settled. The famines and wars have added to this natural eco- 
nomic pressure and people have been forced to cooperate. We 
had a taste of "hard times" in the seventies, when the over- 
production of wheat and corn, combined with the poor transpor- 
tation facilities, caused such low prices and farmers were brought 
together in the Grange. Other farmers' organizations had sim- 

*Fay, Co-operation at Home and Abroad, p. 3. 
^Marketing and Farm Credits, p. 80. 



Codperal.ioii in Af/ricuJltire, Marl-ding, and Ilural Credit \\ 

ilar origins; all lost in membership and power when prosperity 
returned. 

The American people have not only been prosperous hut also 
extravagant. ^Ir. Ford in his book '"Coopcratiou in New Eng- 
land" says, "the American people are beyond all comparison, from 
the richest to the humhlest, the most unthrifty and extravagant 
in the world."' Our national extravagance is reflected in our {)ri- 
vate life; so European national economic thrift has its counter- 
part in the home life of the people. The Euro])ean farmer makes 
a living on ten acres of ground and enjoys conveniences unheard 
of in many American farm homes. This ideal of thrift is naively 
expressed in one of the Iiaiffeisen booklets, published by the Eaiffei- 
£en Society: 

'•'Our societies are usually called 'saving and loan hank socie- 
ties.' The word 'saving' is expressly put at the beginning of the 
phrase, because, in the industrial war that we are engaged in, the 
words of Frederick the Great are even more applicable, viz. : 
'Warfare demands three things; first, money; secondly, nionei/, 
and, thirdly, money.' And money does not drop from the heavens 
without toil, but it has to be gathered laboriously through thrift 
and economy. God be praised if the virtue of thrift is found in 
the village, but if we see that if Gustie has a new hat Mith a l)ig 
feather on it, Minna at once goes to buy a still more expensive 
hat Avith a still bigger feather; if we notice that 'demon rum' 
swallows gigantic sums of money because our yonng fellows have 
too much money to spend, then it is clear that the virtue of thrift 
need's to be fostered. But thrift thereby does not become a sister 
to greed liy any means, but it simply follows the footsteps of Him 
who said 'gather the remaining crumbs.'"^ 

Manner of Life 

Lastly, our history and natural environment have brought about 
a difference in living conditions. In many European countries 
the farmers have lived in village communities for hundreds of 
years, and in mediaeval times even the system of agriculture was 
often prescribed by the grou]). So the farmers there have Iieen 

^See Introduction, page 10. 
-nns Raiffeison Doif. 



38 Bulletin uf the L'nicersilij uf Texas 

traiufd in working together. Our farmers have had the opposite 
experience. We settled as pioneers and as individuals, rarely in 
groups and each man was for himself. When he could see the 
smoke of a neighbor's hearth, he moved, for he considered the 
country too crowded. This developed in him a spirit of inde- 
pendence and self-reliance which perhaps was very commendable 
in the early days. However, times have changed and we need to 
adjust ourselves to the new conditions if we expect to get the best 
out of our lives. 

''Independence" 

This feeling of independence has been fostered by om* tradi- 
tions. AVe like the word "independence." Our political orators 
have harped upon the "independence" of the American people, — 
and the farmer in particular, — to such a degree that we prefer 
to lose money and the benefits derived from organization rather 
than give up our so-called "right to do as we please." 

The American farmer, as a class, is alone in this respect. 
Other classes of society have shed some of their "independence'" 
and woik as organizations. The laboring man has formed his 
labor unions and no longer bargains with his capitcilist boss as 
an individual, but makes his terms through his union. The capi- 
talist has merged individual business interests until we have trusts 
in every industry. The farmer on the other hand has usually 
faced the comniCnial world alone. Of course, we must make ex- 
ceptions in the case of the Grange, the Alliance, the Wheel and 
other like societies that have been mighty forces towards uniting 
the farmers. The Grange, the Farmers' Union and the Society of 
Equity of today are examples of great movements aiming to unite 
farmers for social, educational and economic betterment. Never- 
theless, it is true that the farmers are more independent and feel 
the need of organization less ilian otlier classes. There is always- 
suspicion of the motives of neighbors that makes it hard to build 
up a business enter))rise. They are afraid of their own powders 
or fail to see the value of cooperation. An instance is told us by 
a Texan of ]\[cCullocli county. This man's father lived in Massa- 
chusetts. He bought a farm in a community where farmers sold 
chickens at $1.25 apiece, while milk was sold to collectors at 9 
cents a gallon. This gentleman tried to persuade the farmers to> 



Cooperation in, Agriculture^ j\Jar]a'liiig, and Rural Credit li> 

organize and sell their milk. But he could not get them to do so, 
and as a result, found it unpaotltable to go into the dairy business. 

This spirit of independence often shows itself in a lack of busi- 
ness sense or a feeling of obligation to the will of the majority. 
Some one finds that his plan cannot be carried out, and rather 
than yield for the good of the group, he breaks up the organiza- 
tion. 

A good illustration of this statement comes to us from a county 
iji the eastern edge of the Blackland Belt. '"A number of farm- 
ers formed an organization to sell their cotton seed. Cotton seed 
was selling at $8.00 per ton, and they thought they could do bet- 
ter by pooling their seed — calling in representatives of the vari- 
ous oil mills at a meeting and have them bid on it. It was agreed 
to sell the seed of the entire organization to the liighest bidder. 
The meeting was held, and a number of agents of the oil mills 
were present. The bidding was spirited and the price was driven 
up to fifteen dollars, the secretary was just ready to close the deal 
when one of the farmers jumped up and said, 'Mr. Secretary, if 
they CcUi pay fifteen, they can pay sixteen, and unless they raise 
it to sixteen, you can strike my name off the list.' This started 
a riot, and other farmers followed his example. A group of 
them felt that they ought to stay by theii" agreement to sell to 
the highest bidder, and they did their best to urge the others to 
do so. The result was that these linally agreed with the agent to 
sell their combined lots for fourteen dollars a ton, for the agent 
said he could not afford to pay fifteen dollars for the very much 
smaller lot that they had. The others, who refused, failed to 
make a sale that evening, and the result was that they hauled 
their seed to the same car at eight dollars, while their friends 
received fourteen dollars a ton." "Farmers won't stick," is the 
usual terse way of expressing the whole story. As one man from 
Wise county writes, "There is no community interest to speak of 
among farmers. It's every fellow for himself and the devil take 
the hindmost." 

LacJc uf Comniunitij Spirit 

The trouble is tluit farmers very often oiganize simplv for the 
dollars and cents there mav be in it for them individually. Thai 
is why an organization of farmei's is so easily hroken \^^. As soon 



20 Build in of lite Universiltj of Texas 

as there is a loss, some lo^c faith and drop out. They don't realize 
that every business has its "growing pains"' and if members will 
only "stick together" it is bound to succeed. No one knows these 
weaknesses better than the middlemen whose business is being in- 
jured by the farmers' cooperative concerns. They l<now tliat if 
they undersell the farmers' store for just a little wliilu or pay 
better prices just long enough they can induce en( ugh farmers 
to pull away and l)reak up the organization. In the Hio Grande 
Vallev of Texas the truck growers associations were ruined by ex- 
actly such methods. Buyers paid more for the produce of the 
independent producers, and not only that, but paid cash where 
those who sold through the association had to wait until the re- 
turns came in about three weeks or a month after the shipment. 
Soon the members began to desert, and the association was broken 
up. After that the dealers had things their own way. Prices 
soon fell, then they accepted consignment shipments only, and in a 
Kttle while called on shippers to help pay the freight.^ A farmer 
writing from Jefferson county sums up the situation pretty well 
when he says, "Farmers will not stick together for the dollar in 
the future if they see a penny in the present." Another farmer 
expresses his idea of such deserters in the following emphatic way: 
"Bid you know that there are some ten cent men yet, living as 
there was in days of old, like Esau, who sold his birthright for 
a mess of pottage? We have a few Esaus in the Farmers' Union, 
who won't patronize their own institutions, but rather go to one 
who is fighting us, and who, with a pat on the shoulder, will say,- 
'T will gin your cotton just as cheap as that Union gin, and I will 
give you a nice Imggy whip and the Svhip-sucker' bites — and he 
caught a fool."- 

This lack of true community spirit — perhaps it might l)c called 
Christian spirit — is responsible for the many local jealousies and 
quarrels that have arisen over petty causes of which any community 
onght to be ashamed. In one county there are two communities 
in wdiich the farmers established telephone lines, but quarreled 
about some minor detail and they put in two separate switch 
boards at both of these places. Now, it is self-evident that the 

'Farm and Rancli. .Tune 0, 1014. 

-Farmer's Fireside and Bulletin. March 4, 1914. 



Cooperation in Agriculture^ Marketing, and Ilural Credit 2\. 

more people tliere are iii the telephone S3stcni, the more efficient the 
service will be, but rather than j-ield a point, they preferred this 
arrangement. 

In the United States the lack of the cooperative spirit is re- 
fieited in our attitude towards all conimunity interests. Thei'e 
are certain functions which we have given over to the community. 
Ever since the Christian church was founded we liave worshipped 
in common. No one ever had a minister come to his house to 
preach to him individually. We do not Iniry our dead on our own 
propert}^, l)ut in a community owned graveyard. We are teaching 
our children as a community. Our public roads are built by 
the people as a group. It is easy to see why a man should pay 
attention to his own business. It is harder for him to give atten- 
tion to the business of his community. It is a test of his good eit- 
izenshij) to find how he takes care of the community interests. 
One who travels about the State learns to judge the individuals 
of a community by the way they keep up its community interests. 
"What is everybody's business is nobody's business,'' is an American 
proverb that explains our attitude towards the public interests. 

It is an exceptional community that can go into school im- 
provement, or building a new building, or the employment of a 
teacher, and have the whole .community act as a unit. We have 
allowed our political ideas to break up our communities; our re- 
ligious prejudices have done the same. The reiuedy for this 
condition lies in education to a large extent — education in a broad 
sense that will give people a broader view and a more tol<5rant spirit 
towards people who do not believe as they do. We must learn to 
sup]:)ress our own wishes and he willing to work with the ma- 
jority and do as they desire. 'We must learn to work with our 
fellow men and when once entered upon an organization stay by 
it with the same loyalty as a soldier stands by his country. 

The Germans, who have made such a success of cooperation 
through their Raiffeisen Associations, speak of a man who has 
the true cooperative s])irit as a "true Eaiffeisen man," and in one 
of the booklets published by their society they define a true 
liaifTeisen man as one who stays by his society under all circum- 
stances. "Therefore." they continue, "whoever wants to be a true 
TJaiffeisen man must l)uy everything he needs in his household 
from his association, even when it is no cheaper than anvwhere 



22 BuJh'iin of the rnirersiti/ of Texas 

else. . Yes, he must buy tliere when he has to pay a penny more 
than at some other dealers. Only, then, when we are so disposed 
tliat tlie larger whole stands higher in our estimation than pri- 
vate profit, will we strengthen our Eaiffeisen work ?n that all the 
hatred and cut-throat competition of the middleman will not hurt 
us in the least.''^ 

Cooperation has Ijeen boi'n of necessity in Europe and in many 
cases in tlie United States. But it need not be so. It is a theory 
no longer. The success of cooperation in liotli continents has 
demonstrated that farmers can do better in organization than as 
■ individuals. Let us hope that Texas farmers will see the need 
of cooperation long before conditions will be such that they shall 
be forced into cooperation. The growth of tenancy, the deple- 
tion of soil and greater economic competition are signs pointing in 
the direction of conditions which shall force them to do so. 

• Need of Better Business 

Another reason wliy farmers' organizations have failed is be- 
cause there was a lack of business methods. The average Ameri- 
can farmer is not a business man. In fact, he has not had the 
opportunity to learn business methods. His occupation takes him 
away from men and the channels of trade into his fields where 
he works with the soil, his crops, and farm animals. His home 
is right on his farm; he is in close communion with his family 
and sees other men only as his business carries him away from 
the farm. 

He meets men but once or twice a week where the banker or 
merchant meets with people every hour of the day. The mer- 
chant handles money and commercial paper such as notes, drafts, 
and checks daily. He has to be a judge of men and character. 
They wlio sell to him, buy from him, or deal with him are shrewd, 
calculating men whose competition he has to meet. Such con- 
stant watchfulness sharpens his business sense. It is otherwise 
with the farmer. As one farmer from Jim Wells countv puts it : 
"The trouble with the producer is that he does not know men, 
conditions, and markets." The shrewd old, so-called, "pork 
packer" who wrote "The Letters of a Self-"\rade ^NFercliaut to His 

'Das Kaiffeisen Dorf. 



Coaperniioii in Af/rirull nrr, M((r],-clin(j. and Unral Crahl T\ 

Son/' says, "When a packer has learned all that there is to learn 
about quadrupeds (hogs), he knows only one-eighth of his busi- 
ness, the other seven-eighths, and the important seven-eighths, lias 
to do w^ith the study of bipeds'' (peo])le). 

The self-sufficing farmer oL' ohl, if he remains in business, has 
to become the commercial faniiei' oL' the present. "Farming as a 
business not for a living, — that is the notion of the new farmer. 
He is a commcrcialist; a man of the twentieth century. He works 
as hard as the old farmer did. but in a higher way; he uses his 
four 'M's,' — Mind, Money, Machinery and Muscles."^ 

Biiefly, the farmer has not been a business man from three 
]:)oints of view. First, he has not kept books and so does not 
know what his products cost him, which crops were produced at 
a loss or gain, or whether his business has resulted in a surplus 
or deficit at the- end of the year. Secondly, little attention has. 
been given to the selling end of his business; he has not studied 
the demands of the market, the marketing process, or the ])roper 
standardization and jiacking of his products; and lastly his train- 
ing has made him unappreciative of "brains*' in business. He 
underestimates the services of the middleman or the value of an 
efficient manager. But the farmer is not so muth to blame for 
all this for even our agricultural schools have afforded very little 
help in these directions up to a few years -ago. 

However, this lack of business training is a serious haudii'a]i 
when a group .of farmers get together to form a cooperative or- 
ganization. Here is a community affair — "everybody's business"" — 
and the greatest care must be exercised in the very beginning. 
Too often farmers undertake enterprises that are too couiplicated 
or too large and with their meager business experience, as pro- 
moters, they are liouud to fail. That is why large state-wide 
farmers' enterprises arc rarely a success. The secret is to begin 
small and grow with the business. 

Farmers often want immediate lesults. They forget that many 
a business enterprise was promoted and money was sunk in its 
upbuilding, or in advertising for several years before the business 
paid for itself; but this did not discourage the men who went into 
it; they cheerfully paid up the money, feeling sure that the future 

'Farmers' Fireside and Bulletin, Feb. 11, 1914. 



24 Bulletin of ihe Unirersitij of Texas 

would bring its returns. Tlie manager of the farmers' organ- 
izations, on the other liand, is often expected to show returns at 
once, and the returns must be higher than those received by their 
neighbors, who are not members of the organization. A letter in 
the Farmers' Fireside and Bulletin of February 11, 1914, ex- 
presses the same view : "The impatience of the farmer for the 
success of this great work, has done mucli to wreck this work. If 
they would read, they would find that the success of any business 
organization waited for years before they accomplished the desired 
results." 

Even if the organization is successfully launched and every- 
thing goes well for a year or so. a temporary loss may break up 
the organization. This is illustrated l)y an instance in which a 
number of farmers banded together to form a cooperative live 
stock shipping association. The first carload of live stock that 
they shipped bronght them a handsome profit and thev Avere brag- 
ging throughout the whole community how much better they kad 
done than the would have by selling to the local buyer. A second 
carload was shipped, however, at a loss and that broke up the or- 
ganization, and no further community live stock shipping was at- 
tempted. These people forgot that the local buyer had made 
money on some deals and lost it on others, and that if they went 
into the same kind of business they would have to take the losses 
as well as the gains. 

On the other hand, nothing Avill teat-h business methods quicker 
than cooperation. The members of a cooperative societv are 
forced to keep Iwoks in their business because they must protect 
the individual in liis lelation to the grou]). The auditing and 
other committees are schooled in l)usiness methods and all the 
members are l)rought in contact with commercial papers and their 
functions. The experience so gained will l)e made use of in the 
farm business itself. The group cannot afford \o do l)usiness long 
without paying attention to the selling end of the farm business. 
The loss from unwise business transactions and poor marketing 
falls upon the whole group and the efficient manager is welcomed. 

One of the fundamentals of business success is to put a first- 
class article on the market, and herein lies one of the great pow- 
ers for good of n farmers' organization. Every farmer has a dif- 
ferent idea of what a merchant al)lo product is, and of how that 



Cooperalion in Afjricaliure^ Marketing, and Rural Credit 25 

merchantable product should be prepared; the result is that, if 
there is no organization, a hundred different kinds of packing 
and packages will l)c sent out from one station and the prices re- 
ceived will be so much lower. However, if farmers form an or- 
ganization and adopt a standard of qualit}' and packing, they will 
not only put a marketable product on the market but also estab- 
lish a trade name. At Milano we were told that there is a plan 
on foot to get ten or more people to go into a tomato growers' 
association. It is proposed to take the products of these ten 
members and have such strict rules that only the first-class prod- 
ucts will be handled. A brand is to be established and put upon 
each package, and this brand will guarantee that the goods are up 
to standard. By such means, it is hoped that whenever people 
see the Milano brand, they can rest assured that they will get 
only first-class produce. A name will be established for this l)rand 
and higher prices and a good business expected. 

TYPES OF farmers" ORGANIZATIONS 

Cooperative Buying 

One of the simplest forms of cooperation is the purchasing 
society where a group of people get together to Ijuy fertilizer, lum- 
ber, groceries, or any otli«er necessity in wholesale or carload lots. 
The local merchant is often in a position to make very reavsonable 
terms to such a group if they buy in bulk and pay cash. In these 
cases the organization selects a secretary or manager to handle 
the goods and attend to the business. Such a transaction is not 
too complicated for any organization and witli growth in business 
experience can enlarge its activities. Here are a few Texas ex- 
amples: "We ordered cotton bagging as an association, thereby 
saving $150 to $200 on the car. We also ordered lumber bv the 
carload, and saved also at least $200 on the car. We ordered seed 
potatoes. It is our intention to build a warehouse here as an asso- 
ciation, and buy and sell everything- together and we think to do 
at least twenty-five per cent better." 

"I have had experience once in buying corn cooperatively for 
the Farmers' Union. Farmers of Burnett county bought direct 
from farmers in Oklahoma."^ 

'Farmers' Firosidr mid r.nll.^tin. DpocihImt 10. 191.3: Fcliruarv IS. 1014. 



26 Bulletin of the Unirersiii/ of Texas 

Many of the Farmers' Union locals have purchased coal, flour, 
corn, and feed. 

Meat Clubs 

Fresh meat is a luxury on the farm, especially in summer, yet 
by cooperation it is possible to have it with but little expense. At 
one place a farmers' club induced a butcher in a neighboring town 
to make the rounds of the club members once a week. In Doug- 
las county, Minnesota, is a meat club which has been in existence 
for over twenty-two years without the least bit of trouble among 
its members. Every week- one of the members butchers a beef 
about one or two years old. Friday is "butchering day" and the 
owner kills, dresses and cuts up the animal during the day. At 
night the neighbors gather at his house for a social evening and 
take their share of the meat home with them.- 

At Topsy, Texas, there is a successful meat club of this type. 
The farmers own a cooperative slaughtering house and have hired 
an expert butcher to kill the animals. He is paid three dollars 
for killing, keeps the records for the club, and decides whether the 
animals furnished are in proper condition to make good meat. 

Tlie record is kept on a largo sheet posted in the slaughter house 
and includes, the names of the members, the amount of meat taken 
by each member, and the amount furnished by the animal that 
the member brought. At the end of the year if a member has 
used more meat than lie furnished to the club he pays ten cents 
a pound for the excess. The good and poor cuts are divided up 
equally among the members so that every one gets the same pro- 
portion of each. Mr. W. D. Lewis, who told us of this club, said 
there has not been a ripple of discontent. One year a widow was 
unable to furnish a beef, but the members gladly furnished her 
meat free and all were satisfied. 

One farm demonstrator has advocated the building of a com- 
munity ice plant so farmers could store their perishable foods. A 
cooperative creamery could easily add this feature to its already 
existing plant. 

^Supplement to Rural School Atrripulturc (T'niver.sity of Minnesota), 
Novemljer, 191,3. 



Conperation in Agriculture, Marketing, and Rural Credit 2T 

Telephones 

Rniiil telephones are spreading over the whole State. As an I'x- 
ample. one farmer writes, "We have a 'phone system. There arc 
about eighteen rural lines now, with the town well connected up 
also. We believe in cooperation ; the different towns near us have 
taken the telephone fevei- and are going to connect with us soon. 
The Oberin and Weinert people are building 'phone systems. We 
are expecting Rule and Knox City to build soon and connect 
with us."^ 

Farmers' Mutual Fire Insurance Companies 

The thirty-eighth annual report of the Commissioner of Insur- 
ance and Banking of Texas, for the year ending August 31, 191-1, 
lists twenty-five farmers' mutual insurance companies in Texas. 
Twenty-three of these make reports of their business. The re- 
port shows that during the year 1912, $2,676,087.72 of insurance 
was in force, and they paid losses totaling $62,133.59. The same 
report shows that there are sixteen local mutual aid associations 
whose business is confined to one county or to a territory within 
twenty-five miles of the home office. These also could be classed 
as cooperative associations, although some of them may not l)e 
agricultural. 

Doctor 

At the Mercy Farmers' Union Local they have a unique insti- 
tution in having a community paid doctor. One hundred people 
haA'e agreed to pay him $12 a year, or $1.00 per mouth each, but 
he has the privilege of practicing on the outside all that he cares. 
The people say they are well pleased with this )ilan on whicl; they 
have employed him.^ 

Cooperation in Dairij Indu.^ln/ 

Dairying is a coming industry in Texas and it is one that is 
in need of cooperation among the farmers interested. In the first 
place, a silo is desirable, if not necessary, to provide the feed for 

'Fanner'^' Fireside and Bullotin. November 18, ]9l?>. 



28 Bulletin of the LnicersUij of Texas 

the cowp. A Buna man told us that he would like to put in a 
silo but (•ould not afford to own the necessary maehiner}'. '"If I 
could get two or three ol; my neighbors to build silo?^ we could 
afford to buy the machinery together." he said. This is not only 
true in this case but wherever farming operations demand a large, 
expensive piece of machinery. 

If enough farmers are in the dairy Inisiness and a local cream- 
ery is not advisable, cream shipping associations may be organized 
to haul the cream of the association cooperatively, as the farmers 
of Xew Mexico have done. In one community they live thirty-five 
miles from the railroad and take turns in taking the cream to the 
station. 

"Wlicre the amount of milk produced is sufficient tliat a cream- 
ery would be desirable, it ought to be cooperative. There are sev- 
eral in Texas today. It is necessar}-, however, to make sure that 
there are enough patrons with enough cows to furnish milk to 
make it profitable. Promoters whose object is to sell machinery, 
have often induced farmers to l)uild cooperative creameries where 
business did not warrant it, and the machinery was usually sold 
at $500 to $1000 above the market price. In the northern part 
of Iowa, there are over five hundred cooperative creameries, while 
in the southern part, there is hardly one. The reason for this is 
that grafters came in and "ol-ganized creameries where there were 
not enough cows to keep a hand-clmrn going.'- It is impossible to 
organize farmers in that section now; in fact, it is impo>siljle to 
get farmers to believe in any cooperative ideas l)ooause tliov have 
been grafted upon so often.' 

Cooperalirr Breeders' Associaiions 

Tlie average cow in Texas produces about one hundred and fifty 
pounds of butter per year. This is not profitable. All our dairy 
associations and agricultural colleges are agreed that we need to 
improve our dairy herds as well as our other farm animals. But 
a pedigreed or registered sire is expensive and unless a farmer 
has a sufficiently large herd of his own, he is not in a position to 
own one himself. However, if there are enough farmers in a com- 
munity raising the same kind of stock, say Jerseys, it will l)e to 

''\Inil«'1 inpf and Farm Credits, p. 91. 



Ctiopernllon in A (irl( allure, Marie iiiuj. and L'ural Crcdil 'Vd 

then- advantay-L' to Iniy a sire to head all the herds of tlie com- 
munity. ^\v. W. F. liaven, who I'epresented the State of Michi- 
gan at the Coin Show at Dallas, spoke at that meeting on the 
oro^anization oE these hrecders associations in his state. The plan 
hriefiy is this: When the owners of one hundred and'twenty cows 
decide upon the breed they wish to have, the state field agent 
lakes up tlic matter witli the farmcis. The cows are divided into 
tliree grou])s of about forty cows each and three bulls are piir- 
ehased. At the end of two years the bulls are changed from one 
group to another to avoid inbreeding. The initial cost is about 
$10 to $40 per member. Today there are seventy-seven centers 
and in Livingstone county the Holstein Breeders' Association has 
three hundred ap.d forty-seven members.' 

Cooperative Sale throufjh Associali'on.M 

Tliese In'eeders' associations also furnisli a nucleus for coopcr- 
ati\e buying and selling of animals. A buyer wishing to buy a 
carload of Jersey cattle has to spend a week among the unorgan- 
ized farmers to find what he wants. But Ijy having registered 
willi a secretary all the stock for sale in the community, there is 
no difficulty at all. The Breeders' Associations of Wisconsin have 
fouHil this very profital^le and not only hold pid)lic sales, but ad- 
vertise their cattle. In Bulletin Xo. IS!) oE the Wisconsin Ag-ri- 
eultiiial Experiment Station, this is brought out: '"The small 
town of Lake Mills, Wisconsin, is another example of what com- 
munity effort can accomplish in the way of breeding one specific 
kind of cattle. Through the efforts of a few men, many Holstein 
herds exist in the vicinity of Lake ]\Iills. The early activities of 
these men established a reputation for Lake Mills as being the 
greatest Holstein center of the Middle West. Buyers have gone 
there from all parts of the world to buy high-grade and pure-bred 
Holstein cattle. As high as $175,000 worth of Llolstein cattle 
have l)een shipped from Lake Mills in a single year. Breeders in 
the vicinity of Lake Mills have been unable to satisfy all of the 
demand. 

■'Several of the associations now in existence in Wisconsin are 
advertising in the leading dairy papers of the country by carry- 

^See eircular 4 of tlio ^fiolli.^■all Aprifiiltuiiil Cnllciic 



30 Bulletin of the Univeraitij uf Texan 

ing, at the expense of the associations, such advertisements. In 
reply to inquiries, which these advertisements attract, sales lists,. 
published at intervals determined upon by the association, are sent 
out. These sale lists contain a complete enumeration of all stock 
for sale, together with the names of the respective owners. From 
this sale list the buyer may choose whatever he may desire. 

"A community organization may also render great a-ssistanee to 
its members in selling various farm products and in buying feed- 
ing stuffs and other supplies.'^ 

Some excellent breeders' associations are found in other States 
in connection with the United States Department of Agriculture. 
"Two such associations are now at work, — one in Minnesota, 
where short-horn cattle are being bred ; the other in North Dakota 
Avhere a group of German farmers in the semi-arid regions are 
breeding Holsteins. Tennessee breeders are thinking of applying 
the plans to the production of mules; and interest in it is being 
shown in other sections."^ 

The same type of associations could do a great deal in the 
South towards the community eradication of the cattle tick. At 
St. Elmo, Louisiana, there is a splendid dipping vat built bv and 
for the use of the community to fight the ticks. 

Cow Testing 

The breeders' associations often work together in cow-testing 
associations. The individual farmer cannot afford to have a large 
Babcoek tester nor give the time to the work he ought to. to find 
out whether his cows are up to standard or not. These associa- 
tions hire a man who goes from house to house and spend.s a day 
or so at each farrn house, tests the cows, and keeps the record for 
the farmer. In a short time the record of the cow will show 
whether she is paying for herself or is merely a 'hoarder.'" At 
Dickinson, Kansas, such an organization was formed in 1912. 
• They had twenty-one members and three hundred and seventy- 
jiine cows. They assessed eacli member one dollar per cow pa}- 
able quarterly with a minimum charge of twelve cows. It was 
found that the best cow in the herd })roduced $201.00 worth of 
butter and her feed cost $.55.91 ; the poorest cow produced $21.38' 

'Procrrpssive Farnior. January 11, 15)1.'^. 



Cooperation in Agri<-ulture^ Marl-cliiuj. and Rural Credit 31 

worth of butter and her feed cost $33.<?3. This last cow helped 
to cut down the profits of the first and ought to have been culled 
out long ago.^ 

Other Breeders' Associ<dions 

The same type of organization may be used for the improve- 
ment and sale of horses, mules and swine. Grayson county has 
begun to work in this direction. The Sherman Chamber of Com- 
merce lias taken up the matter of organizing a hog raisers' asso- 
ciation. A poultry association has also been formed in this county. 
Farmers of Lee county have organized a Swine Breeders' Associ- 
ation that has more than one hundred members. They also sell 
their hogs through the association, and buy Irisli potatoes directly 
from Maine. 

When it comes to horse breeding associations the money in- 
vested in a good sire is a good deal more than in the other associ- 
ations mentioned. Here the "promoters" have also played their 
game. Many such associations have been sold $500 stallions for 
$3000 or more, and in a year found they have been swindled. The 
advice of competent men should be asked before money is invested 
in an enterprise of this kind. 

Cotton 

In the cotton industry there are plenty of examples of farmers' 
organizations that are doing a good business. 

"Our organization in this district (Quanah) owns and controls 
nine Farmers' Union warehouses to store and finance our cotton 
and cotton seed, and one of the largest oil mills in the state (just 
completed) to grind and protect our cotton seed."^ 

The people at Anna, Texas, have organized a company which 
has successfully built a gin, and operated it for the past season. 
The organizers tried to get one hundred farmers and business men 
into the organization, but got only ninety-three. The cashier of 
one of the banks was made secretary-treasurer and has had a great 
deal to do with the organization and management. He told us 
that they went ahead with their ninety-three members and built 

'Circular No. 35, Kansas Agricultural Experiment Station 
"Farmers' Fireside and l^ulietin. DeiMMuher .S. 191.3. 



32 Bulletin of the University of Texas 

and equipped the gin for $10,700. Tliey allow only one vote to 
one member, restrict the number of shares to be held per member, 
but allow voting by proxies. At the end of last year they paid up 
the difference between the actual share capital and the cost of the 
^in, laid aside $300 for their reserve fund and paid twenty-five 
per cent on the capital. The actual dividend was probably near 
forty per cent. None of the officers receive pay except the secre- 
tary-treasurer, who receives $25. The gin has proven such a great 
success that they are thinking of putting in their own oil mill, 
which, however, will take a capital of $40,000. Tliey do not have 
anv warehouses, although they had room to store a few bales of 
cotton. This gin is a splendid example of cooperation between 
the business men and tlie farmers of the community. The gin 
company lacks some of the features of a truly cooperative concern, 
but is as near to it as their composite membership will allow. 

In Atascosa county, the Farmers' Union secured control of two 
gins in the fall of 1913, and found them so successful that they 
-organized the Cooperative Clin Company of Atascosa county, with 
the object of owing all the important gins of the county.^ 

An interesting letter was published in Farm and Ranch of June 
13, 1914, by C. G. Burkett of Collin county, Texas, which demon- 
strates the fact that farmers can handle their economic problems 
if they once make up their minds to do so : 

"We had four gins in Farmersville up to last summer. They 
had become owned and controlled by the local mill, or at least the 
farmers thought so, and while tlicy were considered very good 
gins, eqiuil to the average, there were many new features in gin- 
ningf cotton that added to the orade of the lint that these gins did 
not have, and tlu' owners did not feel inclined to supply them. 
The farmers also felt they were not getting the full value of their 
seed as compared with other sections. They could see no way of 
getting the best results except by going into business for them- 
selves. They decided to build a first-class gin with a reinforced 
■concrete building, equipped with the latest nuichinery to cost 
$20-,000. About one hundred and fifty farmers and a few busi- 
ness men of the town, who were known to be outspoken friends 
of the farmers, took about half of the stock and an old ginner 

^Farmers' Fireside and Bulletin, December 3, 101.']. 



Cooperation in Agi-iculture, Marketing, and Rural Credit S3 

and farmer took the balance. The gin was completed and ginning 
begun. 

"The first unnecessary evil whicli the new gin eliminated was 
to prevent an advance in ginning and Avrapping of seventy-five 
cents per bale. It was soon discovered that the new gin was turn- 
ing out a bale that sold for from $10 to $25 per bale more than 
those ot the plain gins. This at once compelled the other gins to 
put in improved machinery. 

"They estimated the grade of the cotton wa? raised at least $15 
per bale. This was correction number two. 

"They had their seed under their own control and shipped them 
for about $3.00 per ton moro than they could get at home. This 
was evil number three. 

"There were about 8000 bales raised in that district; the bene- 
fits for last year to the cotton growers was nearly $1.50,000. The 
dividend was forty-three per cent on the stock. 

"Persuasion or petitions would not have had any effect toward 
correcting these evils, but getting into business for themselves 
where reforms were needed did the work. Farmers and merchants 
cooperated together, as they should, and got results." 

There are many farmers' cotton warehouses throughout the 
state, successful in many instances and failures in others. Coop- 
erative cotton marketing has also been tried. One of the most 
successful cases is at Scott. Arkansas.^ 



In a bulletin of this size it is impossible to describe many type« 
of farmers organizations. So far we have only discussed consuia 
<rs' and producers' organizations ; veiT little has been said of sell- 
ing of cattle,, truck or other farm products. This will be treated 
more fully in the chapter on Marketing. 

Essentials to Success in Farmers' Organizations 

The farmers of Texas in many places feel the need of organ 
ization but do not know how to go about it. One farmer from 
Cameron county writes: "I am convinced that many of our 

"'See proceedings of first meeting of Southern States' Association of Mar 
ketfl, Bulletin No. 36, Texas Department of Agriculture, or Progfrft^ire 
Farmer, June 6, 1914. 



34 Bulletin cf the University uf Texas 

troubles in this line may be averted by close cooperation through 
associations throughout the state and 1 believe further, that the 
only way to cure the evils complained of is through a system of 
training by well-organized, well-ofFicered associations, which will 
eventually teach the shippers and buyer as well, the importance of 
and the benefits to be gained by a National Bureau of Marketing." 
In the cliapter on Eural Credits, directions are given as to the 
formation of a Rural Credit Sociiety. The principles stated there 
will apply in general to the formation, of any farmers' organiza- 
tion, so we need not repeat them here. 

Leadership 

Leadership is a large factor in the success of any cooperative 
undertaking. As one farmer writes: "It is not a question of 
what we can do, it's only a question of what we will do, and what 
we do depends upon our leaders. If they are men who have the 
get-up-and-go and have the confidence of the membership we can 
carry out all our undertakings with ease, — and we have learned 
that the right man in the right place is worth forty men in the 
wrong place."^ Due credit must be given to the Farmers' Union 
in the matter of educating the people to work together, and the 
leadership of their men in the formation of these organizations. 

A striking example of what a leader can do is found in Pasa- 
dena, Harris County. There, Mr. Glasgow, the teacher of the 
Pasadena school, has organized a strawberry selling association, 
composed of eightv^ farmers. They employ regularly a sales agent 
at $1000 per year, and the first year's business amounted to $90,- 
000, paying fifty per cent dividend on the stock and leaving $1800 
of undivided profits. They buy their own crates and fertilizers, 
and arc thinking of putting in a cannery to take care of the 
second-class stuff and the local tomato crop. Mr. Glasgow is 
president of the association and, besides his school work and his 
work as president, he calls together the farmers on the last Satur- 
day of each month for discussion of their agricultural problems 
and country life improvement. He himself has a farm of twenty- 
eight acres from which he made a total net profit of $2100 in one 

'Farmers' Fireside and Bulletin. April 3, 1914. 



Cooperation in Agriculture^ Marketing^ and Rural Credit 35 

year. This man by his leadership has made it possible for the 
community to realize its possibilities. 

To go outside of the state, there is a good example of the lead- 
ership of another school teacher who organized his patrons in a 
Northern Wisconsin town to build a cheese factory and a cheese 
selling association. In one year he saved the people of his com- 
salary of $1500, but they were $300 ahead at the end of the year, 
salary of $1055, but they were $300 ahead at the end of the year. 
These two examples will show what leadership will do for the 
community. 

Specialized Industry 

Another factor in the success of farmers' organizations is to 
have a specialized industry in a restricted area. This is especially 
true where wie have a producers' association. Whenever farmers 
are engaged in general farming, raising no particular crop, there 
is generally not enough interest in the marketing of any particular 
line of products to make it worth while. But whenever any com- 
munity raises a sufficient quantity of truck, cotton, vegetables, or 
fruit there ought to be no reason why a farmers' organization could 
not be formed to market these. Whenever a sufficient number of 
farmers require a considerable quantity of fertilizer or lumber or 
any other product, there is a good opportunity for the formation 
of a buying association. The same principles hold in the forma- 
tion of breeding and' live stock selling associations. The indus- 
try ought to be in a small area, so that the different farmers may 
know each other personally, and so that the cost of concentrating 
the product or handling it is not too great. After a number of 
local organizations have been formed there is no reason why there 
could not be a federation, such as has been carried out in the Hood 
River Valley, where the famous of Hood Eiver apples are being 
marketed. But the federated organizations ought not to take over 
the functions of the locals. 

Books and Auditing 

Another essential is that there should be a good system of ac- 
counting, and, furthermore, the books ought to be open for inspec- 
tion of the members at any time. The Eight Relationship League 
of Minneapolis, which has promoted the formation of cooperative 



36 Bulletin of the University of Texas 

stores in the Northwest, insists upon proper accounting and audit- 
ing of the accounts of the stores under their supervision. In fact, 
the success of their stores is largely due to this precaution, but in 
any organization there ought to be an auditing committee and 
other committees who have the authority to inspect tlie books and 
supervise the business. 

Membership Agreement 

Another fundamental is that there should be a well defined 
membership agreement, and every one should sign it so that h*e 
may know exactly what is required of him. This should cover all 
the details of the business, and in order to hold members, the 
constitution or by-laws should contain some provisions for hold- 
ing them together, or there will be danger that some will leave 
the organization and break it up. The Cranberry Association of 
"New England requires the sale of all the cranberries through the 
Exchange. The Walnut Growers of California fine their mem- 
bers $100 if they are found selling outside of the organization. 

Manager 

A good manager is essential to the success of farmers' organ- 
izations. There is a good illustration in connection with a gen- 
eral store in southern Iowa. They put in a manager whose chief 
qualification was his low salary. At one time he purchased 2000 
pairs of shoes without regard to whether the people who belonged 
to the organization would or could w^ear the shoes. The purchase 
was almost a total loss.^ A good manager must be a well paid 

'Marketing and Farm Credits, p. 90. 
man; one who is willing to w^ork for the benefit of the cooperative 
enterprise, and one who has the ability to handle the business in 
question. 

After employing a good manager, and seeing that he is conduct- 
ing the business honestly, it is necessary to let him manage. Too 
often the members of the organization trouble the manager with 
all kinds of suggestions and feel hurt if he docs not carry out 
their ideas. The manager has troubles enough. A farmers' ele- 
vator manager told us that he was "tired of his job." "If T have 
several hundred bushels of grain on hand some of the farmers will 



Cooperation in Agriculture^ Marketing, and Rural Credit 37 

come in to tell me that I ought to sell and sell quick, for grain is 
going down. The next one that comes will tell me that it is a 
shame to have only four hundred bushels on hand. Grain is ris- 
ing and we ought to take advantage of it. I listen to all of them 
and do as I please. If I didn't have a thick skin I'd have quit 
long ago." 

If the manager is a good man, keep him and do not practice 
rotation in office. One of the reasons for the failure of the Iowa 
elevators was the fact that the farmers passed around the "good 
jobs," as they called it, and changed the management every year 
or two.^ 

What is True ''Cooperation?" 

In the first few paragraphs of this chapter it was stated that 
there is a great deal of confusion as to the word "cooperation." 
So far we have discussed the principles that apply to farmers' or- 
ganizations of all kinds. There is, liowever, a form of business 
organization which is the purely cooperative type, and it is recom- 
mended by the American Commission that, to avoid the confusion, 
the word cooperation ought to be restricted to the purely cooper- 
ative enterprises. Wisconsin has passed a cooperative law outlin- 
ing the requirements for the organization of such companies. This 
law forbids the use of this term to any. company that does not 
comply with the law in its organization or methods of doing busi- 
ness. In the same way the Texas Rural Credit Law forbids the 
use of the name to any banking association that does not comply 
with this law. 

The following points are considered as fundamentals in truly 
cooperative business organizations :- 

One Man One Vote 

1. There ought to be only one vote to one man. Cooperation 
is a combination of men, and not dollars. The small producers, 
or consumers ought to have the same right in business affairs of 
the organization as those who have larger shares of the capital. 

^See Cooperation in Agriculture. G. H. Powell : Cooperation in New 
England, Ford: Keport of AmericnTi Conunission. Senate Document 261, 
part I. 

'Coulter, Cooperation Among Farmers, p. 121. 



38 Bulletin of the University of Texas 

The Eight Eelationship League makes this one of their funda- 
mental principles, because they say it is American and democratic, 
and it would be just as well to allow people to have the voting 
privilege in accordance with the amount of property they held 
when it comes to a national election. Some organizations, how- 
ever, allow the voting privilege in proportion to the amount of 
produce furnished to the organization. This is true of the Cali- 
fornia Citrus Fruit Growers, but this does not mean the same 
thing as being allowed the privilege of voting in proportion to the 
number of shares held. 

Limited Number of Shares to Each Member 

2. The number of shares allowed to each member should be 
limited by the constitution. The Eight Eelationship League does 
not allow more than ten shares to each member. The Walnut 
Growers of California limit the number of shares by saying that 

' there shall be no more than one share per acre of walnut trees. 

No Proxy Voting 

3. There ought to be no voting by proxy, that is allowing a 
member to give his vote to another if the first one cannot be at a 
meeting. It is held that if a member will not attend a business 
meeting he ought to lose his vote. Besides, proxy voting has 
many faults wbich ought not obtain in a cooperaive organization. 

Only Producers as Members 

4. Only those who are interested in the producing or consum- 
ing side of the organization ought to be allowed to become mem- 
bers. In the case of a gin, only farmers who have cotton to gin 
should come into the organization. The share capital of the 
cooperative creamery ought to be held by the patrons who are fur- 
nishing the milk. This principle is carried out by the Florida 
Citrus Exchange and the Walnut Growers of California who have 
it specifically stated in their constitution that only producers shall 
be members. In fact, one of the reasons for the failure of the 
California Citrus Union was the fact tliat others were allowed to 
become member? of tlie omanization. 



Cooperation in Agriculture, Mm-keting, and Rural Credit 39 

It also ought to be stated in the constitution that, if a man 
leaves the organization to go into some other iDusiness, he be re- 
quired to sell his stock to the organization itself, which can then 
resell it to some other producer. This will prevent the stock 
from falling into the hands of non-producers or non-consumers. 
Furthermore, it will prevent a man from being a stockholder in 
two rival organizations. Here is where a truly cooperative con- 
cern differs from the method of organization adopted by the gins 
at Anna and Hillsboro.^ These allow business men to hold stock 
in the organization and the combination of farmers and business 
men is a good one for the latter have been loyal leaders, giving 
time, money, and business experience to the enterprise. But: i-f 
the next fundamental point in cooperation is also insisted upon 
there may be friction. It is this : 

Division of Profits 

5. All profits, above a reasonable dividend on the capital, 
should be divided among those who furnished the business to the 
association. That is the important difference between a joint 
stock company and a cooperative concern — in the former profits 
are divided among the stockholders in proportion to the amount 
of ffioney they have invested in the stock, in the cooperative busi- 
ness the profits are divided in proportion to the amount of busi- 
ness furnished by the members after a reasonable dividend has 
been paid on the stock. To illustrate this, in the case of a store 
run under the plan of the Eight Eelationship League : The con- 
sumers pay full price for their goods, and a record is kept of the 
amount purchased. First the interest is paid on the capital and 
a sum is laid aside for a reserve fund, then the profits are di- 
vided up among the consumers according to the amount they hare 
purchased. Suppose a ten per cent profit has been made. Then 
a man who has purchased $450.00 worth of goods will receive a 
rebate of $45.00. According to the rules of these stores, custom- 
ers who are not stockholders get half as much rebate, in this case 
five per cent, or $22.50. 

To show the difference between the ordinary stock company 

'Farm and Ranch, May 2, 1914. 



40 Bulletin of the University of Texas 

and a cooperative conceni in the division of profits, we will as- 
sume the following case: 

Suppose a $10,000 gin is built and there is no limit to the 
number of shares held bv one member and voting is by shares. 
Mr. A. is a business man and holds twenty-five slaares. Mr. B. 
J6 a farmer and holds one share. They gin 3000 bales at $3.00, 
which would be a gross income of $9000, of which $2250 is clear 
money. They lay aside a reserve of $450, leaving $1800 to be 
divided among the stockholders, a dividend of eighteen per cent 
on the investment. Mr. A. will get a dividend of eighteen per 
cent on $2500, or $4.50. .Mr. B., eighteen per cent of $100, or 
$18. In business meeting A. has twenty-five votes, B. only one. 

According to cooperative principles this is not right. The 
farmer is the one who by his patronage furnishes the business by 
which dividends are created. It is true the capital of the busi- 
ness man ought to produce the usual amount of interest, but 
everything above that does not belong to capital, but to the man 
who has produced the business. jNIany would go so far as to say 
that all the profits should Ijo divided on the basis of business fur- 
nished and this is practicable where the cost of putting up the 
plant, etc. (the physical capital, in other words), is small as in 
the case of a purchasing society. ^, 

Let us work out this assumed case on cooperative principles, 
keeping the number of shares the same. We will allow eight per 
cent interest on the capital. Eight per cent of $10,000 would be 
$800; A. with his twenty-five shares would get eight per cent of 
$2500, or $200 interest; B. on his $100 would get $8.00. Taking 
out the interest on the stock there still would be $1000 of profits 
to be divided in proportion to the business furnished to the gin. 
Suppose B. has furnished 60 bales of cotton which is one-fiftieth 
of the total. Therefore, he would be entitled to one-fiftieth of 
$1000, or $20. The two compare as follows: 

Mr. A. Mr. B. 

In joint stock form — 

18% of $2500=r$450 18% of $100=$18 

In eo6peration form — 

8% of $2500=$200 8% of $100=$ 8+ 

$20 on cotton ginned=r$28 



Cooperation in Agri-culture. Marketing, and Rural Credit 41 

This still looks in favor of A., but in a purely cooperative con- 
cern the number of shares of stock would be limited to a great 
deal smaller number than twenty-five and he would have only one 
vote, no more than B. with his one share. Some organizations 
might exclude A. altogether. 

But under such cooperative arrangement we can see that the 
non-producer stockholders would feel that they had a right to 
object. They would prefer to have the dividends paid upon the 
capital, but according to cooperative principles if they are not 
furnishing any of t/.e business out of which dividends are created 
they are not entitled to the profits above a fair return on the capi- 
tal invested. 

Limited Stock Dividend 

ti. In most cooperative concerns the interest on shares is lim- 
ited by the constitution and by-laws, as has been explained in the 
example given above. In the Cranberry Exchange of New Eng- 
land, six per cent is allowed on the money in shares, and the rest 
i>f the profits are divided on the basis of business furnished. 

Reserve Fund 

7. As shown in the above, example, a certain reserve fund 
should be set aside before profits are declared. This is very im- 
portant, for in very many farmers' organizations nothing is set 
aside for repairs or depreciation, and the results are that they 
pay enormously high dividends for the first few years. But after 
awhile the bills come in for repairs and depreciation, t>e divi- 
dends drop off, and in fact members may be called upon for as- 
sessments instead, and then it is likely that the organization will 
be broken up. One of the reasons for the failure of the New 
England creameries is the fact that no reserve fund was laid 
aside. The Wisconsin Cooperative law requires that all institu- 
tions organized under that law must have a reserve fund. They 
must set aside ten per cent of their net profits, until this amount 
is thirty per cent of the paid up stock, after that five per cent 
must be set aside for an educational fund to be used in teaching 
cooperation. 

Judged by these standards there are not many farmers' organ- 
izations in the United States that are trulv cooperative. "But 



42 Bulletin of Ike University of Texas 

any organization of this kind may be said to be cooperative in 
spirit when it is managed exclusively with a view to giving the 
farmer a better price for his butterfat or his grain, and not at 
all for the purpose of securing dividends on the stock/' says T. 
X. Carver/ "If the stock is owned by farmers and if each share 

'Year Book, U. S. Department of Agriculture, 1913. 
of stock is in practice limited to a normal rate of interest and all 
surplus earnings go to the farmers in the form of better prices, 
the enterprise is cooperative in spirit, even though its form be 
that of the ordinary profit-making corpoi'ation. 

"However, it must in frankness be admitted that there is al- 
ways danger, under the joint stock form of organization, that the 
cooperative spirit will be destroyed and the organization shifted 
to the profit-making purpose. In a creamery, for example, if one 
man own a large number of shares and very few cows, or none at 
all, he will naturally be more interested in dividends than in the 
price of butterfat. If a majority of the shares are owned by such 
men, the company is almost certain to be managed in the interest 
of dividends rather than in the interest of the price of butterfat. 
It is therefore highly desirable that the form of organization be 
such as to prevent this result and insure that the management 
shall always be in the interest of the producers. Nevertheless, so 
long as the management is in the interest of the producer, it is 
reasonable to list such an organization as cooperative." 



CHAPTER II 

MARKETING 

INTRODUCTION 

Lt would not be possible to discuss in one short chapter all of 
the important questions in connection with the marketing of 
farm products. Marketing has been for some time a much studied 
question and there yet remains a vast amount of study and effort 
before some of the most perplexing difficulties can be removed. 
The purpose of this chapter will be to show some of the conditions 
which exist at this time in our own state, and to suggest improve- 
ments and solutions which may be offered by the individual farmer 
rather than by government action. The statements made here 
concerning conditions are from the people concerned. The chap- 
ter is a product of the evidence and testimony which have been 
given to us by faraiers, shippers, merchants and dealers. This 
information has been obtained either by correspondence or direct 
interview. Naturally, those who have furnished us with infor- 
mation have also given us much personal opinion. Of necessity 
much of this is omitted. The purpose of this chapter is not argu- 
ment except as the experiences of the producers tell their own 
story. Wherever opinion has been offered or scheme of solution 
by tJie government proposed, we have considered the same and 
placed it where those concerned with law making may have access 
to it when desired. 

Correspondence and interview have brought us charges and 
counter charge? of fraud, theft and dishonor. But producers, 
middlemen and consumers all make mistakes. Not all the present- 
day difficulties could be based upon mistakes, but we have hesi- 
tated before putting into print the charges brought in many cases 
and some of them will not appear. Enough is given in these 
pages to show that the widespread dissatisfaction of the farming 
class has a very solid basis. It is not personal opinion but a de- 
duction from facts that the farmer and producer markets his 
wares against great odds. Conditions in many places are chaotic. 
It is also a deduction from his own evidence that he is not doing 



44 Bulletin of the University of Texas 

what he should to leinech' his own condition. The principles 
underljang what lie should do have been suggested in the previous 
chapter. 

The conditions and times demand action. We advise a cam- 
paign for cooperative marketing because it has succeeded. It will 
be well to note again the distinction drawn in the first chapter 
between true cooperation and some of the organizations which 
have paraded under its name. We advise cooperative marketing 
in the second place because it will eliminate from the produce 
world much of the personal antagonism and fraud which now exist. 
It will show that men in certain situations are victims of circum- 
stances. Methods and principles will be studied instead of per- 
sonalities. A third reason for advocating cooperation in market- 
ing is the fact that it will make students of the producers. To 
study the market is to find out what to produce, how much to 
produce, how to prepare it, and where to dispose of it to the best 
advantage. There are many other facts in favor of cooperative 
action and prominent among- them is that it is a method within 
the grasp and control of the smallest producers as well as largest 
and there need be no \\-ait for legislative action or further work 
on the part of those not actually following the plow. In this 
way private initiative, while not antagonistic to, may yei be in- 
dependent of, state action. Cooperation will eliminate conflict 
by making useless those who cause it in the marketing world. In 
time legislative action will assist that which has been done by the 
producer himself: that which he must do of his own action 
whether legislation comes first or second. 

Crops and Values 

During the past year nearly five thousand farmers have had an 
invitation from us by letter to give information on marketing con- 
ditions. Twice five thousand and more have had a direct per- 
sonal invitation. Out of the hundreds of letters which we have 
received, we tabulate the following facts: 

_ , Per cent of Letters in 

Products Mentioned. Which Mentioned. 

Cotton Qi 

Truck and vegetables 3gg 

Grains 17 



Vodperation in Agriculture, Marketing, and Ilural Credit 45 

Per cent of Letters in 
Products Mentioned. Which Mentioned. 

Corn IG 

Live stock 15 

Fruit 13§ 

Poultry and eggs 131 

Dairy products 9 

Hay and feed !) 

Wool 3 

Pecans ?, 

The eleven classes mentioned include nearly all products upon 
which we have been furnished informatidn. There is an average 
mention of about two products per letter. Of course, this does 
not mean that these farmers have an average of only two products 
to sell, but it does mean that they have only that many which they 
consider worthy of note when talking about marketing problems. 
The class of truck includes all the different kinds of vegetables. 
The grains include wheat, oats, etc. Kaffir, milo, etc., go under 
■com or feed. All other products are very scattering. For ex- 
ample one mention of tobacco; one of sugar cane; one of molasses; 
and five of honey were given. It is worthy of note that even in 
a limited number of letters, grain, corn and live stock stand close 
together. Also that dairy products and hay and feed are tied for 
•eighth place. 

The following table taken from the last census shows the value 
•of these classes of products for the year 1909 : 

Cotton and seed $188,673,954 

Truck and vegetables 12,122,255 

Grains 16,545,305 

Corn 50,564,618 

Live stock 78,648,000 

Fruit 2,304,574 

Poultry and eggs 5,909,942 

Dairy products 15,680,000 

Hay and feed 12,824,433 

Wool 2,202,342 

Pecans 556,203 

It will be seen from this that the following pages contain a 
•discussion of the marketing of all our principal agricultural prod- 
ucts. However, they are not discussed in the order of their value. 



46 Bulletin of the University of Texas 

Grain 

As is well known, the rice producers have had some experience 
in cooperation or association work. Eice growers say freely that 
by association they have secnred much which could not have been 
obtained by individual action. What can be done further is well 
suggested in this statement : 

"The rice growers and truck growers seem to be having trouble in buy- 
ing feed which they do not raise. . . . The rice men have an organ- 
ization for selling, which handles their business in a manner satisfactory 
to them, but have failed tq see the need of cooperation in buying. To 
illustrate: The rice farmer has very little land suitable for feed crops, 
so he has to buy a large amount of feed; in fact, the larger part of his 
expense account is his feed bill. If the grain growers were as well organ- 
ized as the feed or grain dealers, they could sell direct to the rice growers 
through their association at a better price and the rice man would buy 
food cheaper. Corn has not sold for less than $1.00 per bushel for a long 
time, and often at $1.10 and $1.15. These prices are not governed by the 
price the farmer gets. In talking the matter over with my neighbors 
who grow rice, I find that they are hopeless of any relief from the 
exactions of the middlemen. Good table rice is sold by our local rice 
mill at from $3.50 to $5.00 per 100 pounds, yet rice retails in our local 
stores at 7i to 8^ cents per pound. Some of us are hoping that the feed 
growers will organize and divide the profits the middlemen now get 
between producer and consumer." 

The rice grower wants feed. Here is the man with the feed. 
It is simply a question of get together. 

"I raise corn, cotton and grain, the principal crop being oats. Marketed 
15,000 bushels. I own and operate a farm with hired labor, doing every- 
thing from breaking land to threshing with own machinery. ... I sold 
my crop through local dealers. I think the price would be better if a 
more direct communication could be had with the consumer. My observa- 
tion is that our local buyers buy on a good margin, and sell to other 
brokers who also require a margin. Commission selling is very rarely 
satisfactory in the grain business, but I find it very much so in the cattle 
business; however, in the latter transaction, your prospective buyer is 
looking at your wares, while the displaying to a buyer of fifteen or twenty 
cars of sacked grain, or loose grain, would be quite an item in time, space, 
expense, etc., and after all the satisfactory handling of farm products 
through the channel of commerce to the consumer will remain, as a rule, 
an unsatisfactory business transaction." 



Cooperation in Agriculture^ Marketing^ and Rural Credit 47 

Hay and Feed 

CloseJy related to the grain market is the market for hay ami 
other feed stuffs. Opinion is about evenl)^ divided as to satisfac- 
tion and dissatisfaction in buying and selling. 

In one case where satisfaction has been had the selling has 
.been done through an association. The large amount thus handled 
has attracted more buyers. The association manager received the 
bids from the buyers and the producer accepted or rejected any 
bid. This has been found effective in keeping the price up to the 
quoted market. Weekly meetings were held for the purpose of 
discussing the market and "the spineless ones were worked with 
until a better system of marketing could be worked out." Suc- 
cess in this case has been due largely also to the fact that a ware- 
house was constructed. Now the product is sold as a .whole : 
grading is easier and the buyer does business with the association 
as if it were one man. The association sells only in car lots and 
therefore does not have direct connection with the consumer. 

Another alfalfa association has trouble in reaching the small 
consumer because so many people want to do business on reference 
only. The distance over which some hay must be shipped makes 
all personal contact between buyer and seller impossible and thus 
the large buyer has the advantage over the smaller. It is sug- 
gested that greater security could be had with some kind of mar- 
ket supervision. At this time the safe way seems to be through 
the association, even for a man who produces as much as 150 tons 
of alfalfa and 25,000 pounds of seed in one year. 

The price of unorganized effort is stated in the following com- 
ment: 

•■'Hay season conies and the town is filled with hay wagons. Dull time 
with the town people; a few grain men buy it at $8.00 or $9.00 a ton, 
store it, and in the winter sell it at 50 cents a hale, or $16 to $18 per ton." 

With regard to this condition the question naturally arises, 
did the grain men come first or did they come second ? If second, 
then the producer must have been waiting for a market. Here is 
one producer who found out in time: 

"The bundled feed was loaded on wagons and hauled to be sold to any 
chance buyer who might happen along. I quit selling such feed because 
marketing consumed too much time, and because ultimately that kind of 



48 Bulletin of the University of Texas 

marketing would impoverish the land. I sold direct to the consumer and 
the price was fairly good. Milo heads consumed less time marketing, the 
price was fairly good, and usually one could place a car with some mer- 
chant in the cotton country. The stalks could remain on the land. That 
looked fairly good, but I soon saw that my stock could graze the stalks 
to advantage, but this same stock would later need the grain. I sell no 
more mile heads." 

Satisfaction in selling hay and feed seems to come from the 
two sources of associated effort and ability to store and hold. 

Dissatisfaction comes from several sources. One example is 
where selling was done to a distant company upon exchange of 
telegrams. This system worked very well on a rising market but 
in certain cases of falling market the company would return mes- 
sage that the hay was not up to agreement or classification. One 
party who sells about sixty tons of alfalfa, claims that it was 
wholly due to local conditions that hay last year was worth only 
$14.00, while the year before it sold for $20.00. As with the 
grower of perishable produce, so with the seller of hay, it seems 
that sometimes he is out his feed and asked to pay something 
more to cover freight charges. One sorghum producer sold last 
year about 400 tons by carload throughout the state and found 
about three out of five dealers honest, honorable business men. 
Knowledge of only one market has caused several shippers to re- 
ceive a price which might have been refused if there had been 
any knowledge of another market. One shipper says he has had 
several unsatisfactory deals because he was afraid of "being stvick 
with a car of hay perhaps one hundred or two hundred miles 
from home." That he had a right to this opinion is proved by 
the following: 

"I know of one party at this point who shipped a car of hay to North 
Texas and it was refused. He wired the parties to unload and sell for 
his account. His returns on same were 92 cents, but they kindly sent him 
$1.00. At this same time h« could have gotten $4.50 per ton on track here 
for bedding hay, and the hay he shipped was fairly good, fall cut, feeding 
hay, but a little dark. If there had been a bonded broker within fifty to 
one hundred miles of this hay, it would have paid him well to have paid 
ihis broker's expense and commission to go to the town and dispose of it 
for him, and he would have had the satisfaction of knowing he had not 
been robbed." 

The majority of growers of hay and feed make haste to explain 



Cooperalion in AijrlcuUure^ Mar/retiug. and J!ural Crcdil 49 

that while they charge down-Jight dishniiesly uii tlic part of sume 
of the dealers, that tliey are assured that there aie uiaiiy lioiiest 
conniiissioi) men. The trouble seems to be uncertainty more than 
dishonesty. The producer is willing to admit that the majority 
of commission men are honest but that it is certain that thei-e are 
some dishonest ones who are largely responsible for the perplexi- 
ties and difficulties with which the average producer must deal. 
No one will deny that a number of commission men fill a legiti- 
mate place in the present marketing system. It would a])pcar, 
therefore, that the honest commission men would he \ery anxious 
to have the dishonest eliminated from the business. Could not 
the produL-er assist in this as well as the dealer? Take for ex- 
ample the case given above, where the town was filled up with 
hay wagons at the busy season. If there are among the buyers in 
tliis case dishonest men it is as much the fault of the sellers as 
it is of the buyers themselves. Xothing could be simpler than 
cooperative action on the part of the sellers and by a very simple 
association, dealing only with buyers who prove themselves trust- 
worthy. In other words, if the producers use no foresight, make 
no attempts to contract with a buyer in advance, but simply drive 
into town, sell to the best price, and if necessary compete with a 
neighbor who is also a seller, does not this kind of business man- 
agement get just the kind of a bu3^er that it deserves? The aver- 
ave dishonest commission man does not have much to do with an 
effective farmers' organization. As we might say in the case of 
hay, the fields are greener somewhere else. 

The principles lucntioned in the preceding paragraph apply not 
only to hay and feed but to pratticallv everything wJiieh the 
farmer has to sell. 

There is a general opinion on the ]iart of the consumers or 
those who buy hay. that retail prices are too high. They are 
prol)ably not too high considering the way the business of buying 
is carried on. The point is, that the average farmer has little 
defense when asked. "Why do you Ijuy feed?" But it is a well 
known fact that there are numy who could produce feedstuff, who 
prefer to buy. Of course, this kind of a preference is rather 
costly. If the farmer uses the busims- management, \vl i^h leads 
him to buy a manufactured article to feed to his live stock, is it 
not reasonal)le io supjiose that lie will have to pay manufacturers' 



50 Bulletin of the Universitij of Texas 

profits and the commissions of the commercial world for so doing? 
To those who cannot produce their own feed, there is as much to 
be said on the side of unplanned and unorganized buying as there 
is to those on the side of helter-skelter selling. 

Corn 

With corn, as with hay and feed, although local supply does not 
equal our demand, the producers are about equally divided as to 
whether marketing is satisfactory or otherwise. Prices vary with 
local conditions. For example, out of the first half dozen letters 
glanced at the following prices are quoted : Eighty cents in shuck ; 
$1.00 a bushel; seventy cents in shuck; whatever the merchant 
says it is worth. The dollar corn was sold to neighbors. The 
seventy-cent corn was repoited satisfactory witli a yield of 35 to 
40 bushels per acre. 

One letter reports : 

"Ten loads of corn will glut tlie market in Paris and prices go down 
15 to 25 cents per bushel, and the same thing with oats." 

The next one says: 

"Corn is never considered a product for the market in East Texas coun- 
ties from the fact that it consumes all the grain crops at home. This 
countiy buys corn every j'ear." 

The solution of high prices and low prices in these two com- 
munities by their getting together in organized exchange is easy. 
One correspondent says : 

"I liave bought from tlie dealer at 75 cents per bushel, seventy-two pounds 
for a bushel, cash, in spring, and sold better corn the coming fall at 25 
cents per bushel of seventy-five pounds for a bushel." 

Perhaps so, but this docs not mean that the farmer paid too 
mucli nor that he received too little. No one had corn in the 
spring perhaps, except the dealer. One seller and many buyers 
mean high prices. In the fall it was one buyer and many sellers, 
hence low prices. In addition to this fact we must remember that 
the value of an agricultural product depenrls largely uiwn where 
it is, and what time it is there. 

Since corn is usually regarded as a grain and is a large item 



Cooperation in Agriculture, 21 arreting, and Rural Credit 51 

in feedstufl'e, what has been said above on grain and feedstuff!^, 
applies also in the case of corn. 

Marl-eUng of Live Stocl: 

Among the farmers who have given us information concerning 
tlie marketing of live stock, there is about one satisfied seller to 
two dissatisfied sellers. One satisfied seller cays that he sold (30 
Jersey cows this year at a good price and that he did this by ad- 
vertising. This man, of course, is more than an average pro- 
ducer; he is (just the same as the cattlemen) in a specialized 
business. The majority of our correspondents belong to the class 
of general farmers. The following comment applies to the ma- 
jority of the producers who have written us : 

"I have a few fat hogf5 for sale. Our local dealer offers me &h cents, 
live weight. He sells pork from IG to 20 cents. Of course, I could do 
better by selling to San Antonio or Fort Worth packers, but I have no 
carload. Through the medium of our Farmers' Institute I tried to organize 
clubs, but the farmers won't organize." 

Another case is that of the producer who Jias several thousand 
acres of pasture, and half as much land in cultivation. He says: 

''We market cattle, sheep, hogs, horses and mules, and these consume 
most of the rent feed on the place. What feed there is left is disposed 
of locally, and the selling becomes a personal proposition of salesmanship. 
The fat stock shipped to market is handled in a satisfactory manner by 
the live stock commission companies. There is so much competition be- 
tween these concerns that there is a constant incentive to better sales. On 
the whole, we have no fault to find with the present system of marketing 
stock and wool." 

Here is another case of the ])roducer who is al)Ove the average : 

"I market about $4000 worth of hogs of my own raising for some years, 
and find that selling through commission men, mostly at Fort Worth and 
Oklahoma City, has been satisfactory, though the slow movements of trains, 
that is, the long stops and lay-overs, caused heavy shrinkage, but in justice 
to the railroads, will say that though I have lost from that cause, I have 
never put in a claim that was not settled without suit. All feed stuflF was 
consumed on the farm, but poultry was never. soLd for a fair price except 
in a few cases where I sold to a man trying to load a car. My hogs were 
finished for the packer; my poultry the same. To the man who does not 
e.xpect too much, I believe cattle and hogs are pretty well handled if the 
leading stations were forced to furnish water for the stock at each and 



52 lUilhiin of the Unirersily of Texas 

ex-ery station wlieu tliey are handled. I liave been forced to haul water 
a long distance at heavy expense to water stock after a long drive before 
I could load, as it would be twenty-four hours before I could compel the 
road to water." 

With regard to shipi^ing iacilities, and accommodations fur- 
nished by the railroad, opinion is divided, but the majority believe 
that this phase of the marketing situation is fairly satisfactory. 
It is to be regretted that so little is said concerning the quality 
of the product sold. Very little mention is made of improve- 
ment in breed or an attempt to furnish high-grade stuff. There 
is much criticism of the difference that exists between what the 
Ijroducer gets in the local market and what the consumer pays 
at the local meat market. Little counnent is made upon losses 
which mu'^t be incurred in transforming the product on the hoof 
into a finished meat product. Most of this kind of criticism 
comes from those who have had a very small amount of product 
to sell. In one case, there is criticism because certain local deal- 
ers have bought up cows, and after keeping the same for a cer- 
tain ninnber of weeks, have douljled their money. It would ap- 
l^ear that such ciitieisnis are unjust. The writer knows of sev- 
eral cases where such local buyers have built silos, and have sim- 
ply finislied out. the cattle in the way that the small producer 
c-ould not or did not want to do it. This is legitimate business. 
The writer has in mind one case of an Indiana farmer who bought 
fifty-three head of calves out of the Texas market, and after keep- 
ing tliem for a few months, during the winter season, on a little 
pasture, MJieat straw, and silage, sold to a profit of about $1300. 
The calves were finished to top the Indianapolis market. It 
appears that this is a case of regret not open for criticism except 
that the feeding out was not done in the State of Texas. 

Among tlie difiiculties that a certain man who sells from 400 
to 500 sheep, and 200 to 300 head of cattle a year or more, has 
to deal with, are given the following: First, althougli commis- 
sion men are men of ability, their charges are high : second, that 
the price is controlled by a very few firms: third, tluit when hay 
is fed in the pen, that it is. sold at a higli price. Several examples 
are given to show the wide margin which exists between prices in 
the local market and the large city market. Tliis ])oint is brouglit 
out along anuthci' line l)v tlic iurkev market. Tliis letter shows 



Cooperation in AffricHlfiirc. Mnrl-cting. and Eiiral Credit 53 

tliat (Ou])erative action could be applied to advantagx'. It is the 
testimony of a woman : "I tlionglit I would raise turkeys, but 
there is no market here and by the time I sliipi)ed them to Shreve- 
])ort, paid the express and commission there, 1 could not afford to 
raise fowls, so have turned my attention to raising cattle." 

Word from the sections of the State tliat are classed as cattle 
country indicates that there would be a iiiucli greater production 
of cattle by the smaller producers, or general farmers, and there- 
fore the men who do not care to go extensively into the cattle 
1)usiness, if the rates of interest on cattle loans were not so high. 
And if the small producer could have equal opportunity with the 
men who specialize in cattle. The following paragi-apli comes 
like a breath of the ojjen air: 

"I am making my living on tlie safe and snie plan by k»H^ping milch 
cows and hogs, and running them on green pasture all the year. Fat hogs 
and cream is always a good price and sure market. I have my farm 
fenced off in fields and plant only one kind of crop in a field, and when 
the crop is gathered I open the gate and turn in the cows and they clean 
up the field, stalks, weeds, grass, and everything, and have the field ready 
for the plow, and make cream enougli to pay all our running expenses." 

After reading the testimony of both sides, one is almost ready 
to agree with the "P. S." added by an earnest correspondent : 

'"The person that solves the marketing question satisfactory to both the 
buyer and seller must possess wisdom that would make Solomon hwk like 
30 cents." 

Dairy Products 

The rapidity with which silos are l)eing introduced bespeaks an 
early increase in the amount of dairy products. In other states 
the farmers in many localities have had their first experience in 
cooperation through tlie creamery. In Texas, this has been a 
neglected lousiness. Wlint ])]'Oflucts have Ijeen ]>roduc('d liavc de- 
]iended largely upon local markets and fluctuating ])rices. The 
future promises better prices and the government by giving us the 
l)arcels post has aided most in bringing about that situation where 
producer and consumer can get together. Opinions may differ, 
but actual experiences in marking dairy products by parcels post 
seem to be entirely satisfactory. 

"j^fv butter netted mo 2-^ cents l)y parcels post. At the same season 



54 lluUelin of the Unirersll.i/ of Te.ras 

our country stores \v«'ro paying 12^ cents per pound. I save all my syrup 
buckets, mould butter in brick, wrap with bought butter paper as I mould. 
This paper keeps the butter fresh for quite a while." 

"Since the parcels post has been in vogue we can get 35 cents per pound 
for butter, when the local market pays only 15 cents." 

"I market 2000 to 4000 pounds of butter or butter fat and 30,000 to 
50,000 pounds of milk annually. First I sold through creameries and later 
found it more satisfactory and profitable to manufacture my ownti butter, 
and under the new parcels post laws find it very satisfactory, selling to 
city customers 200 to 300 miles distant." 

Some o})inions do not agree witli what has aetualiy been done. 

"We also sell about $400 worth of butter every year, at from 27 to 30 
cents per pound. The merchants seem to have a set price to pay for 
butter. They think that 25 cents is all they should pay for it. It seems 
to me that the butter maker should be in touch with the butter eater. 
There is so much red tape about mailing butter that we think it won't pay. 
People want it fixed very secure. Our butter is very firm and solid. We 
use a separator and make the butter out of cream. Butter made from 
cream is superior to butter mad? from milk." 

Of course, there is "red tape'' about it. But red tape m this 
case is wortli money. It is the customer who demands the best 
and that best served to him in the way he wants it who is wortli 
while. The producer who tries to satisfy a want stands a better 
show to get l:is money than the producer who tries to make a con- 
sumer want something else. The producer can determine the 
character of the supply but the consumer determines the character 
of demand. He expresses his opinion in terms of money. N^ote 
how it is brought out in the following cases: 

"T have marketed during the present year about 200 pounds of butter 
to my Incal people, they being the actual consumer, receiving 25 cents 
per pound, or a total of $50, which has been very satisfactory to me under 
existing circumstances. Our butter was moulded in one-pound moulds and 
wrapped carefully in tissue paper, delivered direct to our customers by 
someone on the farm two or tliree times a week." 

"We are phinuing to build up a herd of Jersey cattle. We are eight 
miles out. At first I tried selling skim milk, buttermilk, eggs, and butter 
direct to consumer by making three trips a week. Prices were fair. The 
rovuid trip over a scattered town was too much for man and team, and 
my customers often moved without leaving their addresses, so that I would 
lose small bills in that way. \^'e found that plan unsatisfactory. We 



Cooperation in Ai/ricidiure, ]\far],'cti)ifj. and Ixiiral Credit 55 

then began selling butter to our grocoryniau at 25 cents per pound. We 
got nice cartons, put our butter up in neat packages with trade name, 
character of contents, and maker's name printed on outside. People learned 
our trade name and our butter became popular. The price gradually rose, 
until we have received 35 cents per pound all the year of late. Our gro- 
ceryman always sells the butter at 5 cents more per pound than he gives 
us. This is satisfactory all around, as much as any plan can reasonably 
bg expected to be. Of course, if we made much butter we might be unable 
to sell it for quite so much a pound. Our groceryman will have bought 
about $850 worth of butter from us this year wlien this month has passed; 
the demand is so great that it causes the clerks some trouble to decide who 
shall have our butter when the number of pounds available varies. We 
expect to market eggs the same way, and have cartons ready, but, alas! 
not the eggi. (Price nf the butter is cash.)" 

The following case seems to present a problem which has been 
met successfully by parcels post. But even at the lowest figure 
mentioned butter is perhaps more piotitaljle than iiio.st of the 
staple products : 

"Our butter netted, or rather brought, us 30 to 35 cents per pound so 
long as local demand consumed the local supply. When local supply 
exceeded local demand, we got only 17 or 18 cents per pound. We sold 
to the local merchants, preferring to do this rather than make deliveries 
with s.-j few pounds. Creamery butter throughout the time we have been 
here — three years — has never been below 30 cents. One of our neighbors 
made deliveries for 35 cents all the time, her customers preferring her 
butter to the creamery product." 

In certain places, there are charges of unfairness against the 
creameries in the making of tests. In cases of this kind the farm- 
ers in many sections of the country have simply started their own 
creameries on the joint stock or cooperative plan. 

In general the marketing of dairy products is satisfactory. 
Prices quoted are usually high compared to prices in other sec- 
tions of the country. The regret is tliat the dairy business should 
have such a small development. 

roaltnj and Eggs 

The selling of poultry and eggs is usually closely connected 
with the selling of dairy products. So far as the producer is con- 
cerned the market is in most instances local but the parcels post 
is modifvincr this the same as in the case of dairy products. Re- 



5G Bnlletin of ike Universiii/ of Texas 

eoiitl\-, ihei'e came to our oiiicc 1)\- pai'cels post a ti'st shipment of 
one dozen eggs from Long Island, Xew York". Tlie eggs and paste- 
board package were in perfect condition when they arrived. Par- 
cels post eliminates all middlemen liy substituting the postage 
stamp. Here cooperation is not needed on a large scale because 
there is a direct relation between ])roducer and consumer. 
Dressed poultry can be liandled in the same way. It appears to 
us that the government by giving the producer and consumer the 
parcels post has given them the solution for every problem men- 
tioned in the following case : 

"We liave marketed several liundred eggs, for wliicli we liave received 
an average of 15 cents per dozen only: sold to local dealers and consumers. 
Eggs were gathered up every day and carried to market twice a week. 
The price received was not very satisfactory. Have recently sold on the 
local market four dozen hens to a local dealer, who is buying and ship- 
ping, only paying 5 cents per pound, and I notice hens are quoted in 
Houston and other cities at 11 and 12 cents per pound. From these 
figures it seems that somebody must be getting something for nothing; 
the producer is not getting the worth of his poultry, and the consumer 
is paying a long price for what he gets, the producer getting 5 cents per 
pound for his hens, or about 22 to 25 cents per lien, and the consumer 
paying 12 cents per pound. ^Yhat poultry (that is, hens) that go on his 
table at 50 t > 60 cents per lien, or more than as much again as the pro- 
ducer gets, cnnnot be satisfactorv with the producer or consumer." 

In our effort to get at marketing conditions, we have welcomed 
information from merchants and dealers : 

"To give you an illustration of marketing of poultry, I give you below 
some figures which may prove interesting. Suppose I pay the producer 
$3.00 per dozen for two dozen chickens, which is about what the average 
shipping coop contains, and consign them to an honest commission man 
in San Antonio. Here are the results: 

Sold by commission man for $4.25 per dozen .$ 8 50 

Commission. 85 cents : express, $1.00 1 85 

Net to shipper $ 6 65 

Bought by retailer for $4.25 per dozen $ 8 50 

Sold by rctailiT fur 45c each 10 80 

Difl'erence l)etween cost and selling price 4 80 

So you can see how this expense runs up on a small item right at home, 
we might say. The selling expense on two dozen chickens is $3.80 and 



Cooperalioti in Ayruidture, Mnrh-ciing . and PiuraJ Credit 57 

the transportation expense is $1.00, which don't look reasonable, hut it 
is a fact, nevertheless, and I Ix'lieve that T am putting it a little mild. 
. Now you will ask why don't the |)rodncc'r .ship his own produce? 
He would if he wasn't afraid of iM'iny skinned. He has no confidence in 
the commission man, wliere he would liave if tlie government was behind 
it to assure hini a square deal, and tlie same chicken that he got only 
25 cents for could net liim that under my plan and go to the consumer 
at a little better tlian 30 cents, or give tlie producer 30 cents and charge 
tl'.e consumer a little Ix'tter tlian 3.t cents, and you w^uld ph'ase both 
of them." 

In other words, this means that the fanner receives $G.OO for 
2 dozen eliickens, and the consumer ])aid $10.80. ^V]lo got the 
difference of $4.80? The sliip]^cr got 65 cents; the commission 
men, 85 cents; the ex])ress coni]iany. $1.00; the retailer, $2.30. 
If the retailer fed, he leceived $2. HO minus the cost of the feed. 
In no case was the profit exLCssive. The trouljle was that there 
were four parties standing between the farmer and the consumer. 

Fruit, Truck, and Vegetahles 

The marketing of perishable produce presents more problems 
than any other phase of the marketing question. These problems 
are due to many causes but discussions at this time and place 
must be brief. It appears at times as if the whole vexatious con- 
dition w^as the result of the action of some middleman or agency. 
In general this is by no means the case. 

In order to get a better understanding of the situation and 
conditions, and to show how some of the problems may be solved, 
we shall devote our attention to such questions as: preparing for 
the market; difficulties whicli confront the commission men; 
troubles met with in following a policy of consigning; difference 
between price paid l)y consumer and what was received by the 
producer; how home canning may help and what can be expected 
from cooperation. 

It should be remembered that the Texas farmer has no monop- 
oly in the production of early perishable pi-oduce. On the con- 
trary, after the very earliest part of the season his ])roducts must 
compete with those from other states having a similar climate 
To obtain and hold a market, the product must compare favorably 
with the products from otlier sections as to grading, packing, ap- 



58 Bulleiin of the University of Texas 

pearanee, etc. Ou this point, a volume could be written. A 
dealer gets at the vital points in the following way : 

"The marketing problem is one that requires long experience in locating 
reliable houses, closely watching the market^, keeping posted by wire daily 
or oftener. knowing what you can safely expect' as a safe risk, buying 
only the best stock, and it properly packed^ establisliing a reputation for 
fair dealing, and living up to your agreements." 

This dealer has not only given the jn'oducer a glance at the 
middleman's business, but he has also indicated what would pay 
the producer best. 

Where there is cooperation to the extent that small producers 
comb'ine in loading a car, there many difficulties arise. These 
represent the troubles which arise even if there were no middle- 
men concerned. 

"Farmers have failed to learn the lesson of grading and packing, and 
as all farms in this section are too small for carload shipments singly, 
they have to join in loading, and the quality of the car. is judged by the 
product of the most belligerent man permitted to load. Personally, I 
have suffered considerable loss from this cause, especially in sweet potatoes 
and cabbage, where inferior stock passed the inspector, or where sweet 
potatoes were not sufficiently seasoned to stand shipment. ' I have known 
instances where entire carloads of sweet potatoes have been lost because 
of the loading of a few sacks of freshly dug potatoes, generally because 
someone had made a short estimate of car capacity and the inspector 
would permit thest to be placed in the car to fill. Of course, the chance 
was that they would spoil before reaching destination, and being the last 
loaded they are the first inspected on opening the car, and as a result 
the entire car is rejected." 

"There were 1500 ur more crates of beans shipped from this place last 
spring and two-thirds or more were packed in very poor condition. Many 
were refused by commission men, or prices were very poor." 

Tlie principles of quulit}-, culling, grading, testing, packing, 
etc., form a science. To disregard these things is just as disas- 
trous as to have no knowledge of trans|;ortation rates, lack of in- 
foijuation as to tlio amount of product in the market to which 
products are sent or dealing with catch-as-eatch-can commission 
men. 

In the marketing of perishable produce, not all of the trouble 
is on the producer's side. As a matter of fact, it is quite likely 
that the greater part of the trouble originates with the producer. 



Cooperation in AfjricuUure, Marlceting, and Rural Credit 59 

The middleman has his side of the question : 

■■!My experience is confined to cantaloupes and potatoes, and I lay the 
greater part of the trouble to the farmer. As to the cantaloupes, I liandled 
two cars a year or two ago, when I first got what I thought and what 
was recommended to me as an expert packer to come and pack same for mo. 
He had con.-;idcrable tremble with the farmers trying to put olT any class 
of stuff on him just to get rid of it, and I consider this one of the hardest 
points to overcome. I took the two cars to Kansas City and spent two 
weeks right in the market. When my stuff commenced to arrive I was 
ashamed of it. I put it alongside California and Colorado stuff, which 
came in there all separately wrapped and in a nice clean crate with nice 
labels, and looked very attractive, while my goods were not wrapped and 
my crates with no labels looked rougli. Right here I found that the pack- 
ing had a great deal to do with tlie selling of same. The goods were put 
on the market side by side, and the fruit vender would come in and look 
the two packages over. If he saw a single cantaloupe in my packing that 
'looked the least bit off, he would refuse the crate, while he would feel one 
or two of the ones wrapped in the other crate, and if they were good ho 
would pay from 25 to 75 cents per crate more for the wrapped goods. 
. As to the cantaloupes, you simply can't trust them to allow them 
to crate their own stuff at home, for tliere is always someone ready to 
put in a Iittli> bad stuff." 

■"Before coming to Texas I was in the wholesale produce businocs for 
seventeen years in Iowa, and I wish to state in the beginning that the 
commission man is blamed for a groat many things for which he is not 
responsible. As an example of what has to be contended with, it is only 
in the case of a big surplus and a consequent overst( ck of the markets 
that he is able to get goods consigned to him. In times of scarcity and 
high prices he has to go on the market and pay the price for the goods. 
It is also not unusual for him to get the goods after they have been lying 
around in the railroad yards for several days, after having been rejected 
by some party to whom they were sold. In this case, he has to go on tlie 
market with the goods and get the best price he can, which is usually 
under the regular market, and this fact has a tendency to lower the price 
of the first-class product which has to come into competition with it. This 
grade of stock usually has to be handled quickly on account of spoilage, 
and when the shipper gets his returns there is no question what he would 
reasonably expect from the condition of the goods when ship(Kxl and thinks 
he has been robbed by the commissiim man, and there is no doubt but that 
the shipper is taken advantage of in a good many cases of this kind. 
Another tiling that must be remembered, and tliat is the manner of pack- 
ing goods in an honest manner. It is next to impossible to get a car of 
goods that are packed honestly all tlie way through, and there is another 
place where the' commission man loses a lot of his profits, as he cannot 
inspect but a small per cent of the car he receives, and while all shippers 



Gd J'uJhtin of the University of Texas 

nr<' not (H.-lioiK'sf . the dislioiiost ones imist be made to pack tlieir gnods 
rifllit for llic good of all." 

One of the most I'roqneiit complaint;? against the middleman 
and the ])olic\' of consigning is summed up bv these experiences: 

"In a few instances when tlie market was overnin we have shipped to 
commission merchants generally with unsatisfactory results. Sometitaes 
getting such reports as this: That our produce being too long in transit 
was received in A'ery bad condition, and had to be sold for about what the 
freight charges came to." 

"I had the handling of several carloads of poaches in charge during the 
season of 1912. The peaches were fine and well graded, and we made a 
contract to let a company have them for 50 cents. There was a large 
crop of peaches that year, with the result that prices went down, and we 
leceived a message from the party with whom we contracted stating that 
the peaches were not up to specifications. We were completely at their 
mercy, the peaches were perishable, and we had to sell them, so we let 
them go to a Chicago firm, some bringing !) cents, others bringing nothing. 
I became so disgusted that I traded my orchard off and came to this place 
to tly trucking. I find there is some difficulty here along the same line, 
so I guess there is no use in iiuining. If we could get reasonable rates 
and men could be placed along at the large stations to look after ship- 
ments as they pass through, we might be able to get our produce to the 
consumer and realize some profit from it; that is, if we could have rep- 
resentatives at the point of destination to see that the stufi' was properly 
graded also." 

."Have had but little experience in shipping fiom this section, but will 
state what I did once in shipping from my old home in Louisiana. 1 
shipped five crates each of Elberta peaches to four different dealers in 
St. Louis, Mo., and the peaches were picked the same day. packed by the 
same packer, shipped the same day by express, arrived the same day in 
St. Louis, were sold the same day, and the result was: I got net from 
the four firms I shipped to, and all charging the same commission: $1.47 
net, $2.42 net, $4.87 net, and $5.00 net each for the five crates. . . . 
Can you give a reason why? I can't, unless it was robbery." 

Most truck and J'luit dealei's and growers know that experi- 
ences similar to the above ai'e rapidly disappearing where growers 
aie oi'gani/cod and have llicir ]iersonal representatives at destina- 
tions. 

One of tlie most ])ressing probk'uis in marketing is the great 
difference between what the producer gets and what the consumer 
pays. Tpon this diUVrciicc hiugos the wliojc (|U('stion of limited 



Cooiieralivn in A'lricnllnrc, Murl-clhnj . and llural Credit 01 

production becau.^c of a low price and limited consumption be- 
cause of a \\\»\\ i)ri(c. Abundant evidence can be had of this en- 
hancement of price. The following are examples: 

"I own and operate a large irrigated farm and liave been raising Ber- 
muda onions, lettuce, beets, and other truck which we can raise in large 
quantities. However, on accouht of sucli poor prices obtained for our 
products we are now being forced to resort to other means for a livelihood. 
. . . Season of 1913 I could not realize even 2 cents per head for fine 
head lettuce, when at the same time such lettuce was being retailed in 
Dallas and other cities for 15 and 12^1 cents per head to consumers. It is 
quite obvious to me that wo have to contend with entirely too many com- 
mission men throughout the entire United States." 

"The trouble with the truck is the distribution, as also with fruit. 
I will give one example: In 1912, I was in a vineyard and the grapes 
were going to waste, and seventy-five miles from there the same quality 
sold at \2l and 15 cents per pound. You ask why they were not ship^ied. 
Both places were on the railroad and the same system, but when a package 
was started there was no assurance it would get there." 

"Relating to some experience in 1912, I dumped several carloads of 
cucumbers, besides wliat was never picked from the field. The commission 
housi^' could not sell tliem, cause given, market overstocked. By investi- 
gation at Ciiicago, 1 found that the retail price was not below 5 cents 
a piece, and thousands of people never will enjoy a cucumber at that price, 
and I know that to a consumer that is a prohibitive price and blocks the 
demand for them, which soon results in an overstocked market. Cucum- 
bers at that price are at about the rate of $3.00 per Texas standard crate, 
and we were dumping them for want of demand (reported at any price), 
while 50 cents per crate delivered at Texas common points is a good price 
for the cukes, which is less than 1 cent a piece. Allow another cent for 
freight and other expenses, there is no reason tliat the consumer should 
be taxed 3 cents more for a little cucumber." 

"In 1010 we formed a watermelon association, elected a business man- 
ager, and paid $80 for a 'Blue Book' (o give us all the inside information 
in regard to produce dealers and commission lirnis. And shipped fourteen 
cars of watermelons to difl'erent parts of tiie Xorth. They all praised us 
in regard to the loading of the cars and also the quality of the melons. 
One car sold in Kansas City for $10; not enough to pay freight and other 
expenses. One of our townsmen was in Kansas City the same daj', and 
the class of melons we shipped was retailing for 60 cents a piece. That 
year's business left us to pay, at the least calculation, $200, but the figures 
I haven't at hand. The trouble in this case seemed almost wholly with 
commission men. Our country is new and we haven't had much experience 
yet, but all that we have shipped out we have shipped at a loss. I am 



63 Bulletin of the University of Texas 

sending you a letter wliicli will explain itself in regard to another load 
of watermelons." 

"I sold some tomatoes, thirty crat«s, by express. I received $8.40, and 
some I did not get anything for. I had in one car 590 pounds of cabbage. 
I did not get but $5.80 from thirty bushels of potatoes, yet we will plant 
four acres to tomatoes again, hoping prices will be better." 

"I sold ten tons of watermelons to local dealers; eight cars of sweet 
potatoes to local dealers, sacked and put in car: Two cars at 70 cents 
per bushel; one car at 60 cents per bushel; four cars at 55 cents per 
bushel; one car at 50 cents per bushel. Our potatoes went to Greenville, 
Farmersville, McKinney, and Bardwell, and sold for $1.50 per bushel." 

"For instance, I sell a barrel of spinach or lettuce here. I get here at 
cash deal, $1.50, or somewhere in the neighborhood of it; when that reaches 
St. Louis it sells for about $5.00; commission on that is from 50 to 75 
cents; express, $2.50; icing and barrel, 50 cents, which in all is $4.50 or 
$5.00. Consumer at that end of line pays at the rate of 5 cents jjer 
pound, and sometimes 10 cents, which will retail at $8.00 and more a 
barrel (there is always from 150 to 200 pounds to a barrel). 1 have seen 
lettuce sell at 15 cents a head that won't make a pound to a head. The 
farmer who raised it only got about 1 cent a head, and lots of times 
i cent; a man in a city who eats such vegetables must pay for some barrels 
at the rate of $10 to $15 a barrel, which makes too much profit for the 
middlemen who work at the business. When we ship through an asso- 
ciation we get $1.50 to $2.25 per barrel, and it sells at the .same price as 
before, and the consumer gets it at a little less because they go direct to 
market men. What we need is a standard marketing plan through the 
government, the same as the postoffiee." 

"Two years ago our potatoes were bringing 35 to 50 cents here in May, 
and were sold in retail stores in Joliet and Blue Island at $3.00 per bushel. 
As freight is about 30 cents per bushel, the farmer of Caney evidently did 
not get a fair price. . . . Our potatoes are sacked, the average sack 
weighing 115 pounds, with an average of 220 sacks to the car. I shipped 
this year eight cars through the association. Their charge is 7 cents per 
hundredweight, er an average of $18.18 per car, plus $10 brokerage, bring- 
ing commissions to $28.18 per car. My point here is the unreasonable 
payment of two commissions by the farmer, though I averaged 42 cents 
per bushel. My net profit on thirty acres was $23.31. I know of several 
men who either had to pay freight charges or received two or three dollars 
net for a car of spuds. These potatoes were shipped in June and July, 
through commission men. 1 believe a fair price to growers of early 
potatoes for Northern markets should be $1.00 per bushel F. O. B., at 
least, judging from five years' experience." 

During the eoiiiiiig year we ^\va\\ make a study of thu causes of 



Cooperation in Agriculture, Marketing, and Ihiral Credit 63 

failure and success of cooperation in Texa?^. Many truckers'' asso- 
ciations have either failed oi" are inactive. Dozens of others in 
different parts of the state are makino; nionev for their members. 
The success of these warrant us in advocatino- cooperative buying 
and selling. The following cases ai'e cited merely to show what 
may cause the failure of local associations, what type of problems 
may- be solved and how success may be attained. For the prin- 
ciples of cooperation, the reader is referred again to Chapter T. 

"We had a very good association here in 1912, and I acted as sales 
manager. Most of our vegetables were sold tlirougli commission men, and 
although I still believe most of those people are honest, I must say I was 
sometimes very much disappointed with the returns received. We handled 
twelve cars of cucumbers, ten cars of Irish potatoes, about twenty cars 
of yellow yams, besides various other small truck, all of which was sold 
to commission men. All of our stuff was put out as attractive as it was 
possible to make it, and we made it a point to send out excellent grades." 

"There were sixty-four solid car lots of tomatoes shipped from here 
this season, 1913, and fully one-half as much express, bought and shipped 
by merchants, including all kinds of vegetables. There were some that 
had extra early and heavy yields per acre that did very well. We are 
not satisfied with the present prices, owing to the heavy expense of pro- 
ducing. The price for the first few crates is very satisfactory, but before 
we can get anything near half of our crop off, the price runs down so low 
that, as a general rule, there is very little money in picking. The people 
are doing much better since tliey have organized and hire their own sales- 
man. Crates cost from 3 to 4 cents less than before. Fertilizer, ^8.00 
to $10 less per ton; seed and everything else in proportion. We pay our 
salesman 3 cents per crate for selling in car lots, he furnishing all his 
own help." 

The difference between wliat the producer gets and what the 
consumer pays can only be cut down by eliminating the people 
who get that difference. This can be done only by the process 
of cooperation on the ])art of producers and consumers. It is not 
sufficient that growers organize and then sell as an association to 
the same middleman to whom the individual producer might have 
sold. This merely means a small increase in price for the pro- 
ducer, but the middleman will still control the situation entirely 
by maintaining the present high price to the consumer and 
thereby keeping the demand down to a minimum. Cooperation 
must do for perishable j)roducts on a larger scale what the parcels 
post has done for butter and eggs or could do for fruit and vege- 



64 Bulh'iin of ike University of Texas 

tables in sjiiaJl amounts. Cooperation will succeed onl\- when it 
proves itself more efficient than the middleman. 

Under present conditions there is a large and undeveloped mar- 
ket for perishable produce within the borders of our own state. 
Again there is the possibility of the home canner and the saving 
of surplus stock. The following are given as examples of what 
may he done in this way: 

''I market plums, peaclies, black and dewberries, tomatoes, melons, and 
a number of good hogs. My stuff is always well prepared for market and 
generally commands top prices. I always sell and buy as an individual. 
I have sold quite a lot of fruit and truck through a commission merchant 
in San Antonio very satisfactorily. I've never shipped anything when 1 
could find a good market at home for my stuff. Prices with me are gen- 
erally satisfactory." 

"My best results were selling to grocery merchants in places some dis- 
tance from wholesale houses. I wrote to express agents at these places 
and got names of retail grocery merchants, and quoted them and sold 
direct. I was enabled to sell cabbage, for instance, at li to 2 cents per 
pound, with no loss, as they accepted my weights; whereas, my neighbor 
shipped in carloads to wholesale houses and got from i to f cent per 
pound, after loss was taken out. He loaded in bulk." 

"We raise vegetables and strawberries in quantities large enough for 
shipment. We packed in one-third bushel boxes and crates, or bushel 
boxes. Some commission men dealt fair with us; others took every advan- 
tage possible. I often shipped from forty to fifty crates of tomatoes daily 
at good prices, from 75 cents to $1.00 for one-third of a bushel. In Feb- 
ruary and March our strawberries brought $7.00 a crate. For some years 
we liave shipped very little in our own name. W^e sell to a merchant in 
Rockport. When we have a fair idea how much we will have for the daj^ 
we call him up and ask him what he is paying then, and when he wishes 
the stufl' shipped. We find this fur more satisfactory; then we run no 
risk and know just what we will get before we let it go out of tlie packing 
iiouse. . . .'■ 

"A certain farmer liad four acres of tomatues. From these four acres 
lie canned several thousand cans. Of the four products — figs, tomatoes, 
beans, and peas — he canned with a home canning outfit about thirty thou- 
sand cans. In this way he was able to fix his own price for his product. 
These canned goods were carried to the Beaumont fair for exhibit pur- 
poses. The farmer sold all of these products, and could have sold more. 
The goods were sold to two retail dealers in Beaumont and to some 
private parties from different points. It was stated that lie liad tried to 
sell in bulk to a wholesaler. 'I'lie wholesaler would not talk about the 
farmer's jiricc, neither would the fainu'r i-onsider the i)rici' ollVr<'d by the 



Cooperation in AfiriruUure, Marketing, and IhiraJ Credit 60 

wholesaler, as it was nbout 55 cents less per case of two dozen two-pouu'l 
cans; but when he got in touch with a retailer he sold at the price whicli 
he asked of the wholesaler." 

"Last year I i^old canned fruits and vegetables to the amount of $50. 
I advertised in a Dallas daily, and most of my customers were from that 
city. I received many orders without remittance for same. To these 
people I would send personal reference and state I could not ship goods 
without check for same. But I never received an order from anyone I 
refused to send goods to. However, many would send cash with order. 
1 still have these customers this year. I find I receive very little money 
for my produce, as it costs so much to deliver. Express on small packages 
eats up the profit. But I find it equally as cheap as to deliver by parcels 
post. ... I have 200 bushels of sweet potatoes. They are rotting 
fast, but cannot find a market for them. My highest offer is 40 cents 
per bushel, sacked F. O. B. at Mt. Pleasant. Sacks cost 9 cents each, 
and to haul eight miles over rough roads, you see would leave me scarcely 
anything for my potatoes. For this reason I am feeding them to my hogs. 
I have written several letters to Dallas houses, offering my potatoes at 
80 cents per bushel. They say that the transportation will make the 
potatoes too costly.'" 

Cotton 

As stated on a ijrevious page, three out of every five fannei's 
furnish information on the marketing of cotton before they pass 
to another subject. By far the greater majority are much dis- 
satisfied with present conditions. But there are those wlio from 
one reason or another have found the market either satisfactory 
or fairly so. We gives a few examples : 

"I raised and marketed at the local market twenty l)ales of cotton at 
an average of 13 cents per pound. I marketed my cotton very early. 
Later in the season the ])rice was much lower." 

"I have marketed this year forty bales of cotton, which I received a 
good price for. I store away in a warehouse, watch the market reports 
and turn loose wlien a fair price prevails." 

"We produced through labor on our farm over fifteen bales of cotton. 
and in regard to prices we were very well satisfied, considering the season. 
We got a five months' drouth and cotton did not open till late, and pick- 
ing hard, and that run prices .lown, and we got late rain tliat caused 
mildew. Prices were better here this year than IxTttoforo. Tlie first 
prices here on cotton were from 12J to 14i cents." 

"Have been selling my cotton locally, but shipped last bale to ■ 

& Co., Galveston. A neighbor has been making $3.00 to $4.00 net profit 
per bale by shipping liis cotton to Galveston." 



66 Bulletin of the University of Texas 

"The price was satisfactory for us. As we plant early, our products 
always are the first on the market; our cotton yielded an average price 
at 12i cents per pound. We need but 1400 pounds of seed cotton to make 
a bale of 550 pounds. The bale will bring $68.75; the seed of one bale 
averages to about $7.75, so the bale with seed and wool together yields 
$76.50; the expense for picking is about $11, so it leaves us $68.50 per 
bale." 

'•'I market cotton and cotton seed from 100 to 200 bales and from 50 
to 100 tons of seed properly prepared for market. I grow it on my farm, 
sell at home when prices are satisfactory, consign when prices are below 
10 cents per pound. When I consign I ship to the commission merchant, 
who sells when told to do so. I get market price, don't expect anything 
more; always know what the price is when I order sold, hence have no 
complaint to make. Transportation is satisfactory. Sometimes delays 
arise, but never unreasonable. I look after my shipments and require my 
commission mcreliant t<i look after them. I don't expect too much, hence 
have no complaint to make and am satisfied." 

As is too well known the difficulties of the marketing situation 
tire numerous and the causes of dissatisfaction various. The cot- 
ton market is the study of a life time, it is hoped that our brief 
discussion and the material fiom which we draw it, will not only 
be of seivice to the growers but also to all those who are working 
on the problems connected with the iSouth's greatest crop. 

One cause of dissatisfaction is the variation between local and 
central prices: for example, eleven and one-half cents in the small 
town and two cents above that in the city. This difference causes 
greatest vexation wlien the cotton is due the local dealer because 
of book accounts. In such a case the grower sometimes goes so 
far as to advocate a fixed price. 

If in any community tiie bankers, merchants and other creditors 
of the farmer date their obligations tn l)e due at the height of the 
picking season, it appears self-evident that the cotton producers 
will of necessity bear tbe market. This means loss to all. It 
would mean much to the financial status of the community if 
credit could be arranged to accomplish some of the things that 
the advocates of the warehouse system desire. 

Again it is reasoned by some that when the season first opens 
cotton is high, l)ut after a few weeks the price drops and there- 
fore the farmer loses ten or twelve dollars on each bale. It would 
be just as logical for the melon grower to say that because he 
can't grow watermelons for rhristmas dinner tables he loses sev- 



Cooperation in Agriculture, Marketing, and Ihiral Credit 67 

euty-five cents on each melon that he does grow several months 
afterward. 

One grower reports a sale of eleven bales at thirteen and three- 
fourths cents as unsatisfactory and believes he ought to have had 
fifteen cents. In many cases the grower reasons from the basis 
of "juatness" or "reasonable price." Price is not determined on 
tills basis. 

Prices in certain cases are regarded as unsatisfactory because 
of a fluctuating market and the growers' inability to keep posted 
on the same. Several farmers report unusually low yields and 
then argue as if their crop should be sold for enough to place 
them on an equal footing with their neighbors who have larger 
productions per acre. As is apparent, this has the fault of leav- 
ing cost of production entirely out of account. 

There axe farmers who remember the day when wheat was fifty 
cents a bushel; oats, fifteen to thirty cents, and for cotton six 
cents. To them the prices of the last few years are attractive but 
the rise in the prices of the materials used in production must 
also be kept in mind. In numerous instances twelve or twelve 
and one-half cents is regarded as a remunerative price, and it 
may be. That depends upon cost of production. The situation 
seems to be that those who are dissatisfied with such a price have 
no definite idea of cost of production, and therefore no account of 
profits. While hundreds of farmers say, "the farmer has nothing 
to d« with fixing the price," not one says, "the farmer has every- 
thing to do with fixing the cost of production." 

Little need be said concerning grading, because it has been so 
widely discussed. But it is interesting to note some difference in 
prices due to grading. In one case it was ten dollars a bale. In 
another, there was a difference of $35.00 between highest and low- 
est. In one instance, at least, the work of a demonstraton agent 
to establish at the county seat, government cotton grades was de- 
feated by the action of the street buyers. 

The importance of grading could hardly be estimated in dollars 
and cents. 

"The fanner is unorfjanizcd ami buyers as a rule cannot depend on him 
for any amount of really clean marketable stuff; second, the buyers that 
we have generally do not grade the stuff they buy, but buy it by the 
dozen pounds, etc., which does not offer the producer much encouragement 



68 BnUeiin of the Universitij of Texas 

to raise a better grade, and the buyer comes out even by making off of 
one what he lost on another, etc. Last year one of my demonstrators 
raised a bale of fine staple cotton and when he had it ginned he carried 
the sample to the different buyers in the town for prices. They all made 
a bid, setting the price at what middling fair was selling at, which was, 
if I remember right, 12i cents per pound. It happened that the last man 
he carried his cotton to consulted a Liverpool man, who was at that time 
here looking after the cotton interest of this place; after some few min- 
utes of consultation between the two, which was strictly private, this 
buyer gave 15 cents per pound for it under the advice of the Liverpool 
man. I do not know what this cotton brought on the foreign markets, 
yet I think it is safe to say that it brought at least 20 cents per pound. 
This is only one instance where the farmer's products were underestimated. 
The same day of this transaction another farmer brought a bale of 'King's 
Improved' short staple cotton to the gin, and sold it at the price first 
ofl'ered (12^ cents), the one with the long staple. These conditions have 
existed for a long time, and will continue to do so until the farmers are 
organized, and sell direct to the manufacturers and consumers." 

Jn selling to a street buyer, there is sometimes a variation oi' 
one-half to one and one-half cents on the same grade, on the same 
day, in the same county. Here is another example : 

"I offered two bales of cotton for sale here this fall and was offered 
$10.25 for it. I refused to take it, and hauled it fourteen miles to 
another town and received .$12.80 for the same cotton the same day." 

"What I have, I have been in the habit of selling to local buyers at 
whatever price I '^ould get. I find this so very unsatisfactory that I have 
most abandoned raising it. 1 have seldom gotten more than it cost to 
raise. I was raised on tlie farm under the old system of producing all 
you could of one or two commodities, and selling for what you could get. 
When I came to take up the work upon my own responsibility, I changed 
tactics. After studying conditions I selected the products that I could 
moio or less control the prices of, and I find farming very pleasant and 
reasonably profitable." 

Instances are given of where one small town has as many as 
three buyers but they take turn about in their bidding. Advo- 
cates of the warehouse system call attention to the fact that under 
a proper system of holding, street buying and selling would be 
eliminated. It would also be eliminated by a system of coopera- 
tive marketing. 

The present system of handling cotton and the wastes incurred 
have received much attention, but little is being done to prevent 
great losses. Along this line we offer a few interesting examples: 



Oodperation in Agriculture, Marketing, and Bural Credit 69 

"In the year 1911 I visited the Southeast African Colonial Exposition in 
Cassel, Germany. This expression was held to show the German people 
what could be done in their southeastern possessions in Africa. Tliere was 
a bale of cotton from Southeast Africa, from Egypt, from India, from Peru, 
and one from tlie United Statt'S. That was one time when I was asliamed 
to be an American. All the bales were neatly wrapped. No holes in 
thcni, no cotton exposed, and plenty of ties around them. The American 
bale looked like a tramp, full of holes, which had been patched up with 
a variety of materials, and cotton sticking out everywhere. I thought that 
this tramp-like looking bale had been selected purposely, but later I saw 
thousands like it in Bremen and in Liverpool." 

"Cotton, I think, should be put up in better wrapping, sampled and 
weighed at the gins under bond, and not allowed cut away. I am weigher 
and classer here, and out of 3200 bales I have got eight bales 500 pounds 
each loose cotton and only took the samples that would have wasted. 
A burning shame. Every cotton market should have a weigher and sampler 
at the gin. And again, we should have government or standard types or 
class on hand all the time during cotton season for comparison. I have 
a full set of government types, but some buyeis say they are too full, 
others say they are too shy, all of which goes to prove that out of our 
present Avasteful system and haphazard way of classing we should cer- 
tainly evolve some way that would make a middling bale of cotton be a 
middling bale anywhere." 

Because of limited space we have omitted from these pages 
most of the plans, schemes aiid ideas which have been proposed to 
us as sure cures for various ailments. But there is a preponder- 
ance of opinion when it couies to doctoring the cotton market. 
The following opinion speaks for dozens : 

"It would help some if the government would require every gin man to 
be qualified to grade cotton, and he should be put under bond, and from 
every bale of cotton that he gins he should retain a sample, and number 
it, and also number the bale to correspond; hence, we could sell by the 
sample and never have to cut the bale. There must be something done." 

Again there are .=ome who desire a Bureau of Information es- 
tablished by the government for the purpose of giving out sta- 
tistics of consumption every sixty days. Some avocate a govern- 
ment purchasing agent in every town. Others go no further than 
to advocate open telegraphic reports from the exchanges and a 
])ublic exhibition of standard grades. 

It is quite generally believed that if the ginner were put under 
bond, his weight and grade would be accepted by all wlio handled 



70 Bulletin of the Universitij of Texas 

the bale. This would do away with future cutting, sampling and 
robbing. Insurance rates would be lower as risk would be less. 

One party makes the interesting suggestion that those who are 
able should follow the policy of former days by storing the crop 
in the seed and ginning as the spinners need it. This plan has 
the advantage of improving the lint, of making a more constant 
use of gins and labor, and having fewer gins. It would tend to 
remove the conditions of a glutted market and so equalize prices 
as to prevent the mistake of planting a great acreage on the 
strength of high spring prices. 

For other examples of success in handling cotton or other prod- 
ucts mentioned in this chapter, through cooperative action and 
methods, the reader is again referred to that part of Chapter I 
which discusses "Types of Farmers' Organizations." 



CHAPTER nr 

EUIUL CEEDIT 

INTRODUCTION 

During the past few years, the subject of financing the farmer 
has been more widely discussed, perhaps, than any other subject 
connected with rural life. It is not our intention to go into a 
discussion of the entire subject in this chapter. We expect rather 
to interest the farmers in the material which is now in print on 
this subject. In the back of this bulletin will be found a list of 
books and papers which may be obtained without difficulty. In 
their pages will be found information concerning every phase of 
rural credit and finance. The Division of Public Welfare will 
not only be glad to aid in securing these books and papers for all 
who apply for them, but will give personal assistance and aid in 
any case where a credit union is either contemplated, or is in 
process of formation. 

In spite of the fact that this subject has had wide discussion, 
there is yet need for a more extended campaign of education. 
Indeed, it is along the line of education, leadership, and personal 
service, rather than along the line of legislation, that there is the 
greatest need at the present time. Mr. Leonard G. Eobinson, a 
leader of the Jewish farmers in America, has stated the situation 
very well : "What is needed is not a commission of study but 
one of action. We have learned all that we are going to learn of 
the European credit systems without actually putting our hands 
to it. To my mind, in order to establish cooperative credit in 
the United States, we must have (1) legislation to facilitate the 
incorporation of such associations; (2) education to bring to the 
American farmer a true appreciation of the benefits of such asso- 
ciations; and (3) organization, that is, leadership to perform the 
actual task of organizing and starting these associations." 

The Nature of Capital 

A great many people have a wrong notion about capital. With 
some people it means only money, and, in many 'cases, a great 
deal of money. This is not the right idea. Capital is stored-up 



72 BuUelin of the University of Texas 

savings, and all capital is a result of saving. In order that capi- 
tal may be accumulated, somebody must produce more than they 
consumed. It is evident that if all of a workman's wages are 
spent, and used up as fast as made, that he will never have any 
saving. But as soon as he begins to save something, then he 
comes into a position to be a capitalist. If he uses his savings 
to produce something else, he is then a capitalist. Whether he 
is a capitalist or not does not depend on the amount of his sav- 
ing. Of course, if he is to do much producing, he must have a 
considerable amount of capital. These savings may take any 
one of a greater number of forms. They do not need to be in 
money at all. Indeed, money is a respresentative or a measure 
of true capital goods. 

The farmer is just like the wage-earner is this respect. If he 
expects to be much of a producer, he must have capital. That 
capital must come either from his own savings or the savings of 
some one else. What the farmer really wants is not money, but 
implements, tools, live stock, and other things which help to pro- 
duce the crop. The only reason why he ought to want this capi- 
tal is because, after he has used it in producing his crop, he 
cannot only pay for the use of his capital, "his land, and his labor, 
but have something left out of the crop that he has produced. 
What he has left becomes a part of his wealth, and if he uses it 
for further production, it becomes capital, whether it be large or 
small in amount. 

Why' Should Farmers Borrow? 

Farmers should borrow because they cannot save enough out of 
their own production to allow them to keep up with the amount 
of capital which they should use in their business. In other 
words, the safe and sane kind of borrowing is that which borrows 
for a productive purpose only. Because, at the end of a certain 
time, if the loan has been used in the right way, it has produced 
enough to allow the borrower to repay the loan with its interest 
and have a surplus left. Just here is where we have some trouble. 
The system of credit that so many thousands of farmers use is too 
well kno'mi to need any explanation here. At another time, we 
have said that the farmer who depends on one crop and runs a 
credit account with the guarantee tliat he would pay his debt 



Cooperation in Agriculture, yiarkcting. and Rural Credit 73 

when that crop was produced, stood in a financial position which 
might be represented by the equation that the merchant plus his 
goods equals the farmer plus his crop. That when the time came 
to "settle up," it was usually found that the merchant plus his 
goods minus the farmer plus his crop equals nothing. This is 
not the fault of the merchant, although he may contribute to some 
of the trouble because in selling goods on credit, it is neces- 
sary to sell them for more than it is when they are sold for cash. 
The point that we want to notice here is, that if the farmer has 
nothing left at the end of each year for ten years, he is not any 
nearer to being a capitalist at the end, than he was in the begin- 
ning. In the present credit system, the farmer himself contrib- 
utes some trouble because he buys for two purposes; first, for a 
productive purpose, and, second, for consumption. By consump- 
tion, we may mean a number of things, but most of all, perhaps, 
food and clothing; unless, of course, he has enough credit to buy 
a consumptive good like an automobile, or anj^thing else that he 
may want to use for his pleasure rather than to aid him in pro- 
duction. In a general way, buying or borrowing for consumption 
only, is to buy or to borrow something, and find out when it is 
used up and gone that it has not left enough to repay what it cost. 
In many cases, the fact that a man did possess credit has been 
a detriment rather than an aid, for he has bought without asking 
tlie question as to whether v.hat he was buying, when it was used 
up, would leave him in better condition than he is at the present 
time. Unless a man is possessed of the judgment which will en- 
able him to know when to enter into an obligation or incur a 
debt, for a productive purpose and when to incur a debt for a 
consumption purpose, the credit which he possesses with his mer- 
chant or banker, becomes, in his hands, a gun that he is sure is 
not loaded. The credit system that the country is now using is 
dangerous even in the hands of a person possessed of more than the 
ordinary or average degree of foresight, industry, business sense, 
and management. This is due in a large measure to the extended 
time for which book accounts run. The day when the debt must 
be paid is so far in the future that it coniplctely balances or over- 
balances the fact that we are buying something which is not 
needed. But when the day to "settle up" comes, the cost price 



74 Bulletin of the University of Texas 

for it just as the cost price for the most useful article obtained 
must come out of the crop. 

A Low Interest Rate 

It has been suggested that the Federal Government loan to 
farmers "as a class" at a low rate. If the farmer is "the back- 
bone of the nation" he will resent the idea of any favor because 
he belongs to a class. This is not a question to be settled by 
paternalism. The low interest rates paid by the European farmer, 
about which so much is being said and written, did not begin in 
this way. The lowering of the rate began not with the government 
and it millions plus legislative enactment. It began with the 
folks and cooperative organization. Cooperation is a question not 
of the law but of the spirit. The German who belongs to the 
Landschaftem as a mortgagor does not need to ask a favor from 
his government because his farmers' organization has sold its 
bonds on the money market above the bonds of his Imperial 
Government. The German farmer by private initiative went into 
the horn of plenty through the Jittle end. It had but one other 
place where he could come out. 

Interest is that which is paid for the use of capital. We 
usually think of it in terms of money, and as a certain fraction 
of the principal, but there is no need for us to do this. We do 
not think of share rent in terms of money, although it is as much 
rent as is cash rent. The rate of interest is supposed to be regu- 
lated to a certain extent by law. In Texas it is unlawful to 
charge more than 10 per cent interest per annum. Every one 
who has had anything to do with borrowing or lending knows that 
this law is constantly violated. One of the most frequent ways 
in which the law is violated is to charge ten per cent interest and 
have the loan run for less than a ^-ear's time. If there is a loan 
at ten per cent, and it runs for only nine months, that is the same 
as thirteen and one-third per cent for a j^ear. There is another 
law which has more to do with regulating the interest rate — it is 
the economic law of supply and demand. If there is a small 
amount of capital, and everybody wants it, then the interest rate 
will Ije high, and that is the situation in Texas at the present 
time. Why should there be a small amount of capital? Be- 



Codperaiion in Agriculture^ Marketing, and Rural Credit 75 

cause the majority of producers have consumed as fast as they 
produced and there has been no savings. Our State is yet young. 
If tJiere are no savings there can be no lenders, but there will be 
a great number of borrowers. When there are a great number 
of Ijorrowers, it will follow that they will bid for capital, and of 
course bid up the price which is the interest rate. Reverse the 
case, and have each farmer with a surplus of savings, and you 
will have the majority of people in a position to lend, and the 
leliders will be bidding the price of capital down, because the 
minority of the people want to use it. This is the situation in a 
number of the older countries. They have more lenders than bor- 
rowers, and, as a result, they have a lower interest rate, and it 
would be lower even than it is, if much of their capital was not 
sent away from home for purposes of investment. In Texas, of 
course, we would like to have such capital, and if we make the 
field attractive, it will come to us just the same as a piece of iron 
will fly to a magnet, but we should remember that when it comes 
in the form of money, it represents a certain amount of wealth 
that has been created and stored up in some other section of the 
world. Let us use the example of a manufacturer of farm ma- 
chinery; if out of his business, he saves ten thousand dollars and 
by investing it, it finds its way into the State of Texas as a loan, 
and at tjie same time his farm machinery finds its way into the 
State of Texas, it would be quite possible to take his money loan 
and purchase one of his farm machines. Now, his money has 
gon^ bacic to him, and we have kept the machine. We continue 
to pay interest on the loan, but what we are really paying for is 
the use of the machine. When the machine is used up, it should 
have produced enough to have paid its original cost, for its use 
and leave a surplus. If this could be said of all capital used in 
farm production, it would not be long until the State of Texas 
would be independent of outside capital, and we would have at 
home moffe lenders than we have borrowers. At least, we could 
cut out the wasteful method of borrowing for consumptive pur- 
poses. 

We pause here, for a moment, to remark that we have no sym- 
pathy with the idea of the government issuing any kind of cur- 
rency to be used by the farmers at a low rate of interest. Capital 
is a product of land and labor, through saving, and not the product 



',{j Bulletin of the Universiti/ of Texas 

of a printing press at the dictum of the governnieiil. For the 
individual farmer, going to town with a full wagon and going 
liome with an empty one, will reduce the interest rate quicker than 
the unanimous dictum of all the solons gathered beneath the 
capitol dome. 

The rate of interest varies with the demand for and the supply 
of capital. The average farmer's dinner table is not overloaded 
but too often supplied from the commercial world. Bacon, meat, 
butter, canned goods, dried fruit, in fact everything bought, is 
capital until it reaches the consumer and when the farmer uses 
this capital from the commercial world he must expect to pay in- 
terest and commercial profits for the privilege. A good method 
to begin with to lower the interest rate would be ''to live at home 
and board at the same place." When the farmer goes to town 
with something to sell on each trip, he enters into commercial 
exchange where one form of capital is traded for another and 
there is no need for capital to carry the wasteful credit system 
which now exists. Hence, follows a less demand for capital and 
it is interpreted in terms of a lower interest rate. 

Farm Loans in Texas 

Up to the present point, we have been considering tlie general 
financial situation and farm credit conditions. Let us now turn 
to a more definite examination of the financial situation in which 
the Texas farmer finds himself. 

The following remarks on short-time loans to farmers are based 
upon evidence gathered in 110 different cases in ten diifei-ent 
counties. They cover the years 1912, 1913, and 1914. The total 
amount of the loan is $27,779.00 or an average of $252.54 each. 
The average rate of interest is 10 4/11%. The average time of 
the loan is slightly over seven and two-fifths months. The small- 
est loan recorded is $20.00. and only four are over $600.00. The 
interest rates vary from 8 to 15 per cent. The prevailing rate is 
ten per cent. As to time of loans, there are two payable on de- 
mand, and the others vary from one to twelve months. The 
nalurc of the security given for these loans is interesting. Under 
the heading of chattel mortgage or lien against crop, stock, or 
lotton, are seventy-five loans. Personal securitv is given in 



Codperatio7i in A<jrunllure, Marl-eting, and ]\'ural Cn'dU 17 

eighteen cases. A'ote and endorsement, which is tlie same thing, 
perhaps, as personal, is mentioned in four cases. Vendors' lien 
is mentioned in two cases, and an open account, in one. In ten 
cases, no security was required. The purposes for which the loans 
were made are worthy of note. Supplies, expenses, and to make 
crop are given in seventy-one cases; to pay old debts, five cases; 
-cattle and feed together, seven cases; teams, payment on land, to 
make improvement, and machiner}^, two each; while in nineteen 
cases, the purpose of the loan is not given. 

We have compiled another table of twenty-five loans on short 
time to renters only. These loans are distributed in eight differ- 
ent counties. The total amount of the twenty-five loans is 
$4949.75, or an average of $197.59 each. The average rate of 
interest is ten and one-seventh per cent. The average time for 
which the loan runs is seven and nine-tenths months. In three 
cases, personal security is given; in two cases the landlord has 
given his name ; in two cases no security is given ; and in eighteen 
cases the loan is secured by chattel mortgage. In two cases the 
loan was used to pay a debt; in one case, to buy feed; in four 
cases, the purpose is not given; and in eighteen cases the loan 
was for the purpose of buying supplies or making the crop. Less 
than one-fourth of the loans amount to more than $250.00 each. 

'I'he following figures refer to forty real estate loans in eight 
different counties. The total amount loaned is $115,521.00, or 
an average of $2,888.03 per loan. These loans were granted on 
an estimated security of $244,525.00. The amount loaned is. 
therefore, forty-seven and one-fourth per cent of the estimated 
value of the real estate back of it. The average rate of interest is 
eight and one-fourth per cent, and the average time of the loan is 
twenty-six and three-fourths months. While the average value 
of the loan is $2,888.03, the average value of the property back 
of the loan is $6,113.13. The purpose of the loan in five cases 
was for improvements, in five cases for vendor's liens, and in 
twenty-seven cases to purchase land. The smallest loan recorded 
is $150.00, and only six are for more than $4,000.00. 

In comparison with the farm loans given above, it may be in- 
teresting to give the figures relating to fifty loans to business meu 
located in nine different counties. It should be noted here that 
all of these loans, as well as all of the farm loans given a-bove. 



78 Bulletin of the University of Texas 

are located in not more than ten different counties, from north to 
south in Central Texas. The total amount of the loans to fifty 
business men is $66,829.50, or an average of $1,336. 59 per loan. 
The average rate of interest is a shade less than nine and one- 
half per cent. Five of these loans were payable on demand, and 
the average time of the other forty-five was one hundred ten days. 
The exact use of these loans is not given, but nearly all of them 
went directly into the business. Ten of them were secured with- 
out any security being recorded, and twenty-nine were secured on 
personal security with endorsement in a very few cases. In only 
seven cases is chattel mortgage mentioned. Thirty-one of these 
loans were for less than $1,000.00, nine of them from $1,000.00 to 
$3,000.00, and ten of them over $3,000.00. 

The following table shows into what divisions the one hundred 
and ten short-time loans to farmers may be classed so far as the 
amount of the loan is concerned : 

Amount. No. of Loans. 

Loans below $50 4 

$ 50 to $100 16 

$100 to $150 24 

$150 to $200 14 

$200 to $250 13 

$250 to $300 

$300 to $350 5 

$350 to $400 4 

$400 to $450 6 

$450 to $500 5 

$500 to $550 1 

$550 to $600 5 

Over $600 4 

Total 110 

Three provisions of the Kural Credit Law as it now stands on 
Texas statutes are, that no loans shall exceed $300.00 in amount, 
that no loans shall be granted for longer than eight months, and 
that the rate of interest shall not exceed six per cent. From 
the one hundred and thirty-five loans granted to farmers, as given 
above, we find that seventy-five of them are given for a longer 
period than eiglit months, that the number of loans exceeding 
$200.00 in amount is sixty-one, and that the average ra'te of in- 



Cooperation in Agriculture^ Marketing^ and Rural Credit 79 

terest is about ten and one-1'ourth per cent. The discussion of 
this interest rate will be made elsewhere, but it should be noted 
here that if a credit union were organized under the present law, 
it would first have to overcome the difficulty of taking about four 
per cent off of the prevailing interest rate, besides granting loans 
for a shorter time than is now customary in the majority of cases 
shown by our figures, as well as being compelled to give less as a 
loan than is now given in over forty-five per cent of the cases. 
We do not maintain that this would be true for the entire state, 
but it is true in so far as our own figures are concerned. 

There is little need that we should spend any time in discussing 
further the facts which are brought out above concerning farm 
loans in Texas. It seems evident that they produce sufficient 
grounds for a campaign for improved financial conditions with 
the farmer. It should be remembered that the statistics from 
which the above information is taken were not furnished by the 
farmers, but were furnished by the bankers, and they are in no 
way biased by personal opinion. 

Instead of discussing our present conditions, let us turn our 
attention to a discussion of how the farmer may remedy the situ- 
ation through cooperative action and association. In doing this, 
we shall not draw upon the experience of the European farmers. 
If the reader is interested in what they have done, we again refer 
you to the list of publications in the back of the bulletin, which 
contain full information on all systems now in use. It appears 
that it will be well for us to use an example, or two, of success- 
ful financial cooperation in this country, and to suggest the way 
in which the present Texas Rural Credit Law may be used as a 
basis for similar organizations. Since the examples that we shall 
use, as well as the Texas Rural Credit Law, are concerned with 
short-time loans to farmers, it may be best to first notice one or 
two phases of long-time or real estate loans. 

Farm Mortgages 

The word mortgage comes from two words. The first is the 
word mors, and the second gage. The first means death, and the 
second means a pledge. To a certain extent in our own country 
we have given this interpretation to the word, for it is believed 



80 Bulletin of the University of Texas 

particularly where a man has at one time had the ownership of 
unincumbered land, that if he puts a mortgage on it, that he 
has reall}' given the death pledge to some of his future hopes. 
It is quite within the truth to say that mortgages have never 
been looked upon with any degree of favor. This is due perhaps 
to the fact that most mortgages represent either unpaid amounts 
for the land held in possession or have been placed upon the 
land when there was dire need or distress. We have never looked 
upon the mortgage as a means of investment, and yet there are 
thousands of the European farmers who so regard them. But 
there are many differences between the use of the mortgage privi- 
lege iu this country and its use in Europe. Here mortgages run 
for only a short time. Interest is usually paid each year and 
the simi total of the principal at the end of the stated interval. 
It too often follows, therefore, unless there is shrewd business 
management, that the longer the obligation stands, the more 
dreaded is the day when the principal must be paid. In this 
country there is personal relationship between the man who gives 
the mortgage and the man who loans the money on it. In 
Europe this is not true. In Germany, the Landschaften Society 
with its bonds issued against mortgages stands between the bor- 
rower and the lender. Mortgages run for a much longer period 
of time than in this country; for example, twenty-five to seven- 
ty-five years. The German pays his interest as it is paid in this 
country, but when he pays his interest he also pays a certain frac- 
^;ion of the principal each year so that, at the end of a certain 
period, he has not only paid his interest regularly, but he has 
made enough payments on the principal to completely wipe that 
•out. It follows, therefore, that he does not dread the coming of a 
Ttime when he shall have to pay the sum total of the principal. 
"The same amount is paid each year, but the annual payment in- 
cludes not only the interest but also the amount which goes toward 
paying off the principal. The following table, called an amorti- 
zation table, shows how $1,000.00 may be repaid by an annual 
payment of $70.00 in twenty-six years, the rate of interest being 
five per cent : 



Cooperation in Agriculture, Marketing, and liural Credit 81 

Years. Interest. Amortised. Balance Due. 

1 $50 00 $20 00 $980 00 

2 49 00 21 00 959 00 

3 47 95 22 05 936 95 

4 46 85 23 15 913 80 

5 45 69 24 31 889 49 

6 44 47 25 53 863 96 

7 43 30 26 80 837 16 

8 .^ 41 86 28 14 809 02 

9 40 45 29 55 779 47 

10 38 97 31 03 748 44 

11 37 42 32 58 715 86 

12 35 79 34 21 681 65" 

13 34 08 35 92 645 73 

14 32 29 37 71 608 02 

15 30 40 39 60 568 42 

16 28 42 41 58 526 84 

17 26 34 43 66 483 18 

18 24 16 45 84 437 34 

19 21 87 48 13 389 21 

20 19 46 50 54 338 67 

21 16 93 53 07 285 60 

22 14 28 55 72 229 88 

23 11 49 58 51 171 37 

24 S 57 61 43 109 94 

25 5-50 64 50 45 44 

26 ■ 2 27 67 73 00 

Ou a previous page it was stated that the average time for 
forty real estate loans in Texas was less than twenty-seven 
months. It will be noticed, therefore, that the farm loans granted 
under the amortization plan used in this table run for about 
twelve times as long as the average of our forty Texas loans. In 
the case of a Texas loan, the principal which is paid at maturity 
is, perhaps, a greater problem than the high rate of interest. The 
importance of this subject of real estate loans in Texas may be 
well brought out in a brief way by reference to some figures con- 
tained in the last census. The increase in the number of mort- 
gages without any improvement in the system of dealing with 
them seems to demand greater attention, 

A supplement to the 1910 census says for the State of Texas : 
"The number of all farms, and, therefore, of all farm operators, 
is 417,770. Of the farm operators, 195,863 are classified as own- 



82 Bulletin of the University of Texas 

ers, 2,33:3 as managers, and 219,575 as tenants. Of the owners, 
167,515 operate exclusively land owned by them, while 28,348 
operate land which they rent in addition to that which they own. 
The tenants are classified according to the character of their ten- 
ancy; thus 184,753 are share tenants; 8,639 share-cash tenants; 
17,549 cash tenants; while, for 8,634, no report relative to char- 
acter of tenure was secured. 

"While the total number of farm operators increased from 228,- 
126 in 1890 to 417.770 in 1910, an increase of 83.1%, the number 
of tenants increased from 95,510 to 219,575, or 129.9%. The pro- 
portion of tenants has increased from 37.6% of all farmers in 
1880 to 52.6% in 1910." 

The average number of acres in a farm in 1900 was 357.2, and 
in 1910 it was 269.1, a decrease of 88.1 acres or 24.7%. The 
average value per acre in the former year was $4.70, in the latter 
year it was $14.53. 

Of the 195,863 owned farms, as given above, 128,082 or 66.7% 
were free from mortgage; 64,005 or 33.3% were mortgaged. 
There have been no census figures collected on exactly the same 
basis, but they have been collected on the basis of owned farm 
homes, for both 1890 and 1900. In 1890, 94.3% of our owned 
farm homes were free from mortgage, and only 5.7% were mort- 
gaged. In 1900, 76.6% were free from mortgage and 23.4% were 
mortgaged. It is ajiproximately correct to say that the percent- 
age of mortgages ow owned farms and farm homes was increased 
from 5.7%, in 1890 to 33.3% in 1910. It is true also to say that 
"the absolute increase in tlie number of mortgaged farms was 
greater than that in the number free of mortgage." 

The number of farms in the state, as given above, is 417,770. 
Of this number, 334,765 have not more than 174 acres, and the 
remainder 83,005 have more than 174 acres. The Texas Home- 
stead Law is supposed to prevent a homestead of less than 200 
acres, having a mortgage put upon it. No figures are available 
as to how many farms there are having between 174 and 200 
acres, but it is certain that tlie homestead law would apply to 
something less than 83,005 farms, because there is only that num- 
ber having more than 174 acres in them. But as stated alwve, 
Ave have 64,005 mortgaged farms. It appears, therefore, that in 



('ooj)t'raiion in Ayviculture, Marketing, and Rural Credit '6''^ 

I'JIO out of a total of 417,770 farmg, all I'arms that it was possi- 
ble to mortgage were mortgaged except 18,997. 

In 1910 of the owned farms, one in every three was mort- 
gaged. If there were only 83,005 farms that could be mortgaged, 
and one in every three was mortgaged, then we had only 27,668 
mortgages, but the census says we had 64,005 mortgaged farms. 
- This situation is made clear if we take the vendor's lien into 
consideration. As is generally known, the homestead exemption 
does not apply when the debt is due for the purchase money or a 
part of it. What is made clear is that only two of every three 
farms were free of incumbrance. 

Jewish Farmers' Cooperative Credit Unions 

It is not generally known that among the Hebrews of the 
United States there are several thousand farmers, but it is true 
that the Jewish people are going more and more from the sweat 
shops of the cities and from the commercial lines of work that 
they have followed in the past to the open country and agricul- 
tural pursuits. It is true also that they are carrying with them 
the same thrift, industry, and business management for which 
they have long been famed. In fact it has been true in numerous 
instances that they knew much more about the business side of 
farming tban they did about the practical work, but the success 
which they have attained is worthy of admiration, and the benefits 
their financial success seems so assured that a short account of 
the financial success seems so assured that a short account of 
what they have been able to do and are doing ought to be of serv- 
ice to Texas farmers. 

The Jewish Farmers' Cooperative Credit Unions have a valid 
claim to being the pioneers in this field in America. Eeferring to 
the establishment of a union in Massachusetts in December, 1913, 
one of their reports says: "This Union enjoys the distinction of 
being the first agricultural credit union in Massachusetts, not- 
withstanding the fact that the Credit Union Law of that state 
has been on its statute books since September, 1909. There are 
over twenty Credit Unions in Massachusetts, but they are all 
urban or industrial." 

So far as the record shows, there have been no losses on the 



84 Bulletin of the University of Texas 

part of any of the credit unions, excepting in one case and that 
was due to the fact that the union had its funds deposited with a 
national bank and the bank failed. 

Mr. Geo. W. Simon, Western Agent of the Jewish Agricultural 
and Industrial Aid Society, gave a most interesting address at 
the First National Conference on Markets and Farm Credits, held 
in Chicago, in April, 1913. He referred to the fact that this 
Society, during an existence of fourteen years, had made loans to 
Jewish farmers in twenty-eight different states, to 2,568 farmers, 
amounting to $1,494,437.91. This refers to loans made on second 
01 third mortgages, up to the value of eighty or ninety per cent 
of the real estate owned. Such loans were made for productive 
purposes only, and really added to the value of the farm. The 
Society has collected back twenty-six per cent of the outstanding 
money. Last year, they collected $100,000.00 in interest and 
principal. In addition to this, the borrowers had paid other peo- 
ple about twice that amount on prior obligations, whicli means 
tliat the people must have saved about $300,000.00 in the one 
year. The third annual report of these Unions varies from these 
figures slightly by saying: "In fourteen years that the Society 
has been in existence, it has granted 3,800 loans, aggregating 
about $1,800,000.00. These loans were made to 2,500 Jewish 
farmers in thirty-one States and in Canada," Mr. Simon states 
that the rate of interest on these mortgage loans is four per cent, 
and that, in many cases, the people had previously paid tw^elve 
per cent besides the bonus. After this modified Credit Foncier 
bank had been in existence for some time, it was found out that it 
w^as not suitable for furnishing short-time loans for such pur- 
poses as cancelling old debts, buying seeds, or fertilizer, and pay- 
ing for labor. The next step was the organization of the modifi- 
cation of the Eaiffeisen banking system. Mr. Simon continued : 

"We come to a community, for instance, where there are twenty 
or twenty-five farms, and let them subscribe shares, $5.00 each 
share. If a community will raise $500, we advance to this com- 
munity, this small organization, twice the amount raised, that is 
$1,000. They are all jointly responsible for this $1,000. We 
knew, in the first place, they were good enough: we simplv dis- 
counted their moral character." 

"Now, this small coinmunity h;ul a small capital, say, $1500, 



Cooperation in Agriculture^ Marketing, and Rural Credit 85 

among its twenty farmers, to loan in case of necessity. Why did 
we organize these small banks? The trouble is, where it comes 
to a large loan we could easily reach every one, because everything 
is under the personal supervision of our agents, but on small 
loans, we decided they can reach each other better than we can 
do; we wanted to teach them to govern themselves, and the result 
was that we have organized these credit unions under the Eaiffei- 
sen system. After they had the capital of $1500, they were ad- 
vancing small loans, not to exceed $100, to each other, among the 
members, and charging six per cent interest." 

The third annual report referred to above says : "In 1909 
the soeiety was prepared to attack the problem definitely and it 
was then and there decided to organize these Credit Unions as 
unincorporated or voluntary associations. Meanwhile the spirit 
of cooperation was growing among the Jewish farmers and the 
ground work was being laid for these Credit Unions through the 
organization of many local Jewish farmers' associations and their 
federation into the Federation of Jewish Farmers of America." 

"The first credit union commenced business in May, 1911; 3 
were organized that year, 5 in 1912, and 9 in 1913, making a 
total of 17 in operation. Eight of these are located in New York, 
5 in New Jersey, and 4 in Connecticut. Each of them raised 
$500 or more from the sale of shares to members and the Aid 
Society loaned them each $1000^ with which to begin operations. 
The form of organization of these Credit Unions is similar to 
that of the Raiffeisen banks — after which most cooperative credit 
institutions the world over are patterned — in so far as that system 
could be adapted to American conditions and to the peculiar needs 
of the situation." 

Mr. Leonard G. Robinson, who has been a leader in the work 
of instructing and organizing the Jewish farmers, gives the fol- 
lowing description of the Unions : "Shares in these Credit Unions 
are $5.00 each, and the holder of one share has the same voice 
and the same rights as the holder of, say, one hundred shares. 
Membership in the Unions is open only to members in good 
standing of the local Jewish farmers' association. The entire 
membership of a Credit Union constitutes the General Assembly, 
which has the final decision on all questions. The direct manage- 

^Interest rate charged on this $1000 is 2 per cent. 



86 Bulletin of the University of Texas 

ment is in the hands of a board of directors consisting of the presi- 
dent, vice-president, secretary, and treasurer, who aJso constitute 
the Credit Committee, and are in complete charge of the granting 
of loans, and three other members who constitute the Supervisory 
Committee. The members of the board of directors are not eligi- 
ble to borrow except by a two-thirds vote of the General Assembly 
in each instance. The loans are granted only for productive pur- 
poses or urgent needs. They are not granted for a period exceed- 
ing six months nor for an amount exceeding $100. Interest is 
charged at the rate of six per cent. The security is determined 
by the Credit Committee, and is generally a promissory note with 
one or more responsible endorsement^. Initiation fees and other 
charges, also so much of the net profits as has not been distributed 
as dividends, constitute the Reserve Fund of the Credit Unions." 
Then he adds the following significant paragraph: 

"It is little early at this stage to attempt a discussion of these 
pioneer credit banks on American soil. Some of the effects re- 
sulting from an adequate system of cooperative credit have even 
at this early date manifested themselves in the communities in 
which these Credit Unions were established. The pernicious 
activity of the local usurer has been largely curtailed. The ar- 
rogance of the local storekeeper is in evidence no longer, and the 
farmer is now treated as a respected customer. The Credit Unions 
have endowed their members with a higli sense of mutual respon- 
sibility, and have stimulated them to further effort in the direc- 
tion of cooperation and mutal self-help." 

This was written about a year before tlie following figui'os on 
achieved success were given out: "The table below contains a 
report of the operations and financial statement of these Credit 
Unions for September 30, 1913. As will be observed, tbev have 
an aggregate membership of 517 and a capital of $9,165. They 
have been in operation for periods averaging a little over thirteen 
months, during which time they loaned out $73,624.06, about eight 
times their capital. Their net profits amount to $1,317.93: that 
is, at the rate of 13J per cent per annum on their capital." 

One writer (Mr. Isaac F. Marcosson) who has studied this 
practical system says, "it proves beyond a doubt that the whole 
harrassing problem of rural credits does not need legislation as 
much as it needs real leadership." As Mr. Simon said in Chicago, 



C'ouperation in AgriruUure, Marketing, and Rural Credit 8T 

''If you follow up the same system with experienced farmers, I 
am .«ure you can obtain much better results than we have ob- 
tained; only, go and do it." 

OPERATIONS OF THE JEWISH FARMERS' CO-OPERATIVE CREDIT 

UNIONS SINCE THEIR ORGANIZATION, UP TO 

SEPTEMBER 30, 1913. 

Places Where Formed. Commenced Business. 

Fairfield, Conn May, 1911 

Ellington. Conn May, 1911 

Rensselaer, N. Y May, 1911 

Briggs St., N. Y March, 1912 

Lebanon, Conn March, 1912 

Colchester, Conn April, 1912 

Fallsburg, N. Y April, 1912 

Hurleyville, N. Y May, 1912 

H-ightstown, N. J -January, 1913 

Parksville, N. Y January, 1913 

Woodbine, N. J February, 1913 

Carmel, N. J February, 1913 

Flemington, N. J March, 1913 

Perrineville, N. J April, 1913 

Elienville, N. Y April, 1913 

Maplewood, N. Y April, 1913 

Stevenville and Ferndale, N. Y April. 1913 

TOTALS. 

Number of members 517 

Number of shares outstanding 1,833 

Number of loans granted 1,103 

Amoxuit of loans granted $73,624 66 

NumlM?r of loans repaid 754 

Amount of principal collected $50,816 11 

Amount of loans outstanding $22,808 55 

Interest collected $1,900 35 

Expenses $726 93 

Total assets $27,487 56 

Total liabilities $26,169 63 

Assets over liabilities $1,317 93 

The Catawba Rural Credit Association 

Catawba county, North Carolina, is referred to by well known 
w liters as being one of the progressive rural counties of the 
South. It is interesting, therefore, to find out what thov are 



88 Bulletin of the University of Texas 

attempting to do along the lines of rural credit. The Catawba 
Eural Credit Association of Hickory, North Carolina, was organ- 
ized January 3, 1914, and embraces four counties. The list of 
officers of this association, as set forth in the printed copy of 
their constitution and by-laws, includes a President, Vice-Presi- 
dent, eight Directors, and a Secretary-Treasurer. It is worthy of 
note that six of these officials get their mail via E. F. D. The 
constitution provides for an annual meeting of the stockholders, 
at which time the eight Directors are elected by a plurality vote. 
Upon request of one-third of the stock, the Directors shall call 
a special meeting. Proxy voting is permissible, if authorized in 
writing and filed with the Secretary, and each share is entitled 
to one vote. A quorum consists of all the stockholders reporting 
either in person or proxy a majority of outsanding shares of stock. 
Each stockholder is to be notified seven days in advance of any 
special meeting. Stockholders must be of legal age and sign the 
by-laws. 

The Board of Directors manages the affairs of the Association. 
They have power to fill vacancies in their body until the next 
annual meeting of the stockholders. "The Board of Directors 
shall have power to employ agents, factors, clerks, workmen, and 
attorneys; to fix their compensation; to prescribe their duties, to 
dismiss any officer or agent without previous notice; and generally 
to control and manage the affairs of the Association." The Di- 
rectors have power to loan to members of stockholders upon first 
lien on farm property or lands situated in any of the four coun- 
ties, and on the paid-in value of the stock. They also have the 
power to issue any classes of stock which they think to be for the 
best interest of the Association. "They shall have power to reg- 
ulate the fees, dues, fines, forfeitures, time of maturity of shares, 
the amount and time of payment of installments on shares, the 
form of mortgages, the amount of insurance required on prop- 
erty offered as security for loans, and generally to do any other 
thing they, in the exercise of a wise discretion, may deem for the 
best interest of each and every stockholder of the Association." 
The President, Vice-Presideirt. Secretary-Treasurer, and such loan 
and investigating committees as are deemed advisable are elected 
annually by and from the Board of Directors. The Directors also 
determine the amount and form of the bond required of all offi- 



Cooperation in Agriculture, Marketing, and Rural Credit 99 

cials haying access to any funds. The President executes all 
agreements, and signs all certificates of stock. The constitution 
can be amended either in a regular or special meeting. 

The by-laws of the Association provide that each share shall 
have a par value of $100, and shares are issued quarterly. The 
entrance fees are fifty cents per share. Two classes of shares are 
provided for: installment shares and dividend-bearing, advance 
payment shares. "On each installment share, there shall be paid 
one dollar per month as monthly dues, on or before the first day 
of each month until by the payments so made and the profits 
accumulated thereon the said share shall have attained the par 
value of $100." Dividend-bearing, advance-payment shares are 
sold for a single payment of $90, and participate in profits and 
losses with the installment shares. The advance-payment shares 
are entitled to a four per cent per annum dividend. Such divi- 
dends are paid semi-annually, and charged against the profits due 
to the shares. When with the $90, and the profits on the same 
after the dividends are deducted, the amount shall equal $100, 
the share is declared matured and payable. This second class 
of shares cannot exceed twenty-five per ceflt of the first. All 
other terms and conditions of advance-payment shares are left to 
a resolution by the Board of Directors. On March 14, 1914, they 
adopted a resolution which provides that the above conditions shall 
be enforced, provided the stock remains in force not less than six 
months, and in event of the withdrawal of the stock, the four per 
cent shall be in lieu of all profits or interest on the stock. This 
stock may be withdrawn upon ninety days' notice in writing, and 
the Directors have the power to retire it at any time after it is 
three years old. In case of this forced retirement, the owner is 
entitled to receive the amount paid for tlio stock plus tlie profits, 
after the four per cent has been deducted. The advance-payment 
stock cannot be assigned or transferred except on written notice. 
Loans are made at the monthly meetings of the Directors. The 
Directors appoint an attorney for the Association and make a 
contract with liim concerning fees. His charges for making 
search of title or handling any papers connected with a loan are 
paid by the person applying for the loan. Property offered as 
security is examined by a committee of three stockholders, ap- 
pointed by the Directors for each townsliip. Tn case a share- 



90 Bulletin of the University of Texas 

holder neglects to pay monthly dues on the day the payment is 
due, there is assessed a fine of ten cents on each share for each 
month the dues remain unpaid. 'Shareholders in arrears cannot 
vote, and membership ceases when the monthly fines amount to 
the sum paid as dues and have not been paid on any share on 
which loans have not been made. Shares may be transferred for 
a fee of ten cents on each share of unincumbered stock, and a 
fee of twenty-five cents for each share of encumbered stock. The 
purchaser is held liable for such fees. The certificate of mem- 
bership is signed by the President and Secretary, and bears the 
seal of the Association. "Shareholders in good standing may bor- 
row ninety per cent of the paid-in value of their shares by trans- 
ferring their shares to the Association as security; paying six per 
cent interest, and continuing the payment of their monthly dues." 
Shareholders are entitled to loans upon three kinds of security: 
firsj:, bond and first lien trust deed on farm land; second, the 
assignment to the Association of the certificate of membership 
to the extent of one share for each $100 borrowed; and, third, 
fire insurance policy for such sum as the Directors may require." 
Second or subsequent deeds of trust may be used as security if 
the prior mortgages are also held by the Association. Loans shall 
not be made in excess of two-thirds of the value of the property. 
A description of the property to be given as security must accom- 
pany an application for a loan. Loans arc made only when the 
reports of the appraisers and the attorney who examines tlie title 
are approved. The interest commences on the day the loan is 
made, and is paid at the same time as tlie monthly dues. The 
borrower may cancel his obligation and obtain the collateral held 
by the Associntion as security after paying princi]>al and interest, 
but thirty days' notice must be given, and the Board of Directors 
may waive such notice. Tn such cases, a release fee of twenty-five 
cents is collected on each sliare. In case tlie liorrower fails to 
pay monthly dues for ninety days the Association may order the 
sale of the property. Proceeds are to be used in the payment of 
taxes and assessments: to defray expenses of sellins:: to pav 
amount due the Association as secured In' the trust deed ; and if 
any remains it is given to the ineiuber. Xinetv davs' written 
notice must bo given to the Directors before the shareholder can 
withdraw bis funds. At time of withdrawal the inember receives 



Cooperation in Agriculture, Marketing, and Rural Credit 91 

the monthly dues which he has paid in, minus charges against 
him. In case of death, the heirs, or regular representatives of the 
shareJiolder, may continue the payments on unredeemed shares 
and with the consent of the Directors, they may have the de- 
ceased's unredeemed shares cancelled. No amendment to the by- 
laws may be passed unless submitted in writing one month previ- 
ous to action and then only by a two-thirds vote of all the Di- 
rectors. 

We have gone into the above details concerning this one at- 
tempt at securing better credit for the southern farmer not be- 
cause of the ])roven success of the venture, but because the plan 
and system of organization and control cover in such a definite 
wiay so many of the problems which must be met in most any com- 
munity when the actual work of organization is attempted. 

The fact should not be lost sight of that loose control in bank- 
ing anrl moiietai-y affairs in the past has cost different sections of 
the cou2itry years of triI)ulation. It is well therefore that in the 
future all details should be carefully thought out. 

7/0?^ to Form a Codjieratirc Credit l/nioii Under the Texas Law 

Get together ten or more men of the community who have the 
welfare of the community at heart; men who have among other 
characteristics, thrift, lionesty, and the ability to read and w-rite. 
It is not necessavs that they have any money. Elect a chairman, 
secretary, and treasurer; discuss the importance of knowing more 
about the problems of the community; plan for a series of meet- 
ings; get acquainted: learn to work together; don't talk about be- 
coming your own banker. Talk about cooperating with each other 
and becoming better farmers. Ask the Division of Public Welfare 
of the University of Texas to send you literature describing the 
University Home and School League, and the various kinds of 
farmers' clubs that are doing effective work in other places. Ap- 
point a time for a meeting to discuss the provisions of the Kural 
Credit Union Law as it stands in Texas at the present time. 
Provide for the dues for your present association. Have the 
treasurer hold such dues as a fund belonging to the society. Let 
such mouthlv dues be an encourasrement to savint;-. Study that 



9t Bulletin of the University of Texas 

part of the literature sent you by the University which tells of 
the places where farmers are organized to help each other save. 
If your community is one in which every cent must count, invest 
your fund which is accumulated from such dues, when such funds 
are large enougli, in some way so that they will continue to grow. 
For example, in a calf or pig, and permit the members to take 
turn about taking care of same. This may seem like too small a 
matter to begin with, but you must begin somewhere or never 
have anything saved, and it is better to begin in a small way 
than to come down to the close of life without anything. Begin 
on as large a scale as possible, but if you have nothing, begin any- 
way. In the mean time, the Commissioner of Insurance aijd 
Banking at Austin will furnish you with a copy of the law which 
permits the incorporation of the Kural Credit Unions. Have a 
meeting to discuss the various features of the law. Don't be in 
^a hurry to ask for a charter from the Commissioner of Banking. 
The law won't provide any money for you. It merely explains how 
to conduct business. The law provides that the credit union shall 
have shares of $25 each. It may be before the credit union is 
ready for its charter that the fund of the association built up from 
the dues, or from the investment that has been made of them, 
will be a sufficient amount to pay the first installment of such 
shares. It may be even possible that since at least ten members 
are required, that your common fund belonging to the society may 
amount to $250, or enough to buy one share for each of the ten 
members. This takes for granted that you have found a treas- 
urer to whom you are wdlling to intrust, without bond, at least 
$250 either in money or property. If out of ten men you cannot 
find such a treasurer, there is very little use to talk about a rural 
credit union, even if organized under the strongest law possible, 
for, as the famous financier said, "Character is the basis of credit." 
It might be added here that there are among those who have 
studied the rural credit institutions of Europe, where they have 
made such a marvelous success, those who would like to separate 
the financial side from the moral side. It would seem decidedly 
unwise to do so, as badly as the farmer may need cheaper money, 
there are other things that must not be lost sight of. Among 
theee are the personal characteristics of industry, intelligence, 
stability, and honesty. Upon these things as a basis the farmers 



Cooperation in Agnculture, Marketing, and Rv/ral Credit 93 

of Europe have established their reputation for ability to provide 
themselves with funds in time of need. On this point note the 
following taken from an address by the Hon. Luigi Luzzatti, a 
leader of the Italian people : 

"The Eural Bank, for instance, which arose without capital, 
rich only in its invisible treasure of mutual trust and human 
solidarity, is the fruit of the modest, unrecognized virtues of the 
country folk, bound together by bonds of mutual affection, who 
assist and watch over each other with the subtle vigilance of 
neighbors. And, lo and behold, these humble folk, void of eco- 
nomic lore, have accomplished a miracle, — due to the fact that a 
moral and not a material impulse guided their work — the miracle 
of creating capital out of nothing. They have succeeded in coin- 
ing their simple good faith and their honor, and in transforming 
into concrete credit, — so rebellious to all idealistic considera- 
tions, — promises of payment guaranteed only by their obscure 
immortal souls. And now in Germany and in all the other coun- 
tries which have followed in its footsteps, the business transacted 
by these banks, founded without capital, and which have labori- 
ously built up their own reserve funds, amounts to 10 billions 
each year, and they represent the billionaires of agrarian poverty." 

Some one may say that this is all right in Europe, but that it 
would not do in America. If this is true, then the American 
needs something else more than he needs money. Again it is said 
that cheap money for the American farmer is a dream which 
may be realized some time in the distant future. On this point 
we need only say that there are farmers who are getting cheap 
money, and there is no copyright on their methods which pro- 
hibits the Texas farmers from applying them right now. Neces- 
sity has driven some people to cooperation and necessity will 
drive other people to it. Wliat we are asking for, is leadership 
with a vision clear enough and enthusiasm strong enough to bring 
about the benefits that have been secured by others without wait- 
ing until necessity forces us to do something. In the literature 
which you may secure from the Division of Public Welfare' your 
association can study out all of these questions. Take up the 
Texas Eural Credit law and compare it to other laws. Study its 
provisions. Among them you will find that it takes at least ten 
people to form a Union ; that shares sell for $25, but may be paid 



94 Bulletin of the University of Texas 

for in installments, and that tlie smallest savings may be applied 
toward this end. The law provides that members borrowing from 
the Association shall not be charged more than 6 per cent interest. 
Study its provisions of one man one vote, and note how you are 
studying an association of men rather than dollars. There is 
no limit to the amount of capital or the number of shares which 
j'ou may own, except as you limit your own savings. Discuss in 
open meeting the provision which is laid down that loans shall be 
made only for productive purposes, or urgent needs. Discuss in 
open meeting past experiences as to length of time for which 
loans have been granted. You will see that the law provides 
that no member shall borrow an amount in excess of $300. Ex- 
amine the question as to whether you think this law would limit 
your action. You will find out when you compare it with other 
state laws or foreign laws, that it is not perfect. But it cer- 
tainly is wide enough and broad enough and good enough to 
allow a great beginning, and it can be changed at the next ses- 
sion of the Legislature. Above all things, remember that it 
ought to be far from your purpose to form any sort of organiza- 
tion for the express purpose of eliminating any landlord or mer- 
chant or banker. You are to be concerned with business and 
business principles and not personalities, and if it is not clear to 
you that there need be no conflict between you and the legitimate 
business that is done by the local merchants and bankers, or if it 
is not clear to the merchants and bankers, then there is lack of 
understanding of the situation, or the community at large is be- 
ing run at the present time hy those who have an obscure vision 
and short-sighted business policies and abilities. 

It is to be hoped that what has l^een said above will make clear 
the fact that in some communities it will be best to have a tem- 
porary organization or societv before the real chartered credit 
union is launched. Tn other places it may be possible to start 
such unions without mucb preliminary work. In either case it 
takes leadership before the work will start at all and up to date, 
June, 1914, the law has not been used. The preliminary work as 
suggested above will clear up many perplexities. To begin is the 
most difficult thing. In otlier places it has been surprising how 
people with surplus savings bave become interested and invested 
in an institution when a group of farmers got together, pledged 



Cooperation in Aijvuallure^ Marketing , and lUual Credit 5J5 

their mutual aid and lesponsibility and vowed tliat they would 
go deeper into the si^ludy oi' their problems than they had before. 
However, not much can be reasonably expected from outside 
sources until the members of the association have denionstrated 
their earnestness of purpose and business ability. After the mem- 
bers concerned have proved this to themselves, then it is time to 
transfer from the preliminary organization into a regular char- 
tered and incorporated credit union, which can safely make loans 
as well as receive savings. 



BIBLIOGRAPHY 

General 

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Evidence, Senate Doc. 314, 63 Cong., 1st Session. 

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Minority Eeport, Senate Doc. 261, Part II, 63 Cong., 2nd Ses- 
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Bibliography, Senate Doc. 214, Part II, 63 Cong., 2nd Session. 

Cooperation in Agriculture. Henry W. Wolff. P. S. King & 
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Cooperation at Home and Abroad. C. E. Fay. P. S. King & 
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Produce Markets and Marketing. Wra. T. Seibels, Chicago. 

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Marketing 

Yearbook of Ignited States Dejiartment of Agriculture, 1909, 

p. 161. 

Yearbook, 1911, p. 16.5. "Eeduction of Waste in Marketing." 
Yearbook of United States Department of Agriculture, 1912, 

p. 285. 



Couperalioii in Agriculture, Marketing^ and Rural Credit 97 

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A Terminal Market System. Mrs. Elmer Blade, N. Y. (Dis- 
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Third Annual Meeting of Texas Farmers' Institute, 1913, p. 73. 

Texas Farmers' Congress, 1911, Texas Department of Agricul- 
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Texas Farmers' Congress, 1913, Texas Department of Agricul- 
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• Country Gentleman. Selling Services Department in practi- 
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Country Gentleman. Oct. 4, 1913; Nov. 8, 1913; :\rar. 28, 
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Harper's Weekly. Nov. 8, 1913. "Waste in Shipping of Food." 

Outlook. Feb. 1, 1913. "The Waste in Eetailing." 

MarJceting. — Schemes for Bettering 

Farm and Eanch. Xov. 2, 1912; Feb. 14, 1914; Mar. 28, 1914. 
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Farm and Eanch. May 24, 1913; June 28, 1913. "Harry 
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Country Gentleman. April 12, 1913; Oct. 4, 1913; April IS', 
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MARKETING OF SPECIAL CROPS 

{Cooperative and Otherwise) 

Ajoples. Hood Eiver. Farmers' Bulletin No. 309. 

Cattle Breeders. Wisconsin. Bulletin No. 184. 

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Cotton. United States. Yearbook U. S. Department of Agri- 
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9S Bulletin of the University of Texas 

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Eggs. Yearbook Department of Agriculture, 1911, p. 467. 

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^ Fruit. General. Yearbook of U. S. Department of Agricul- 
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Fruit. General. U. S. Department of Agriculture Bulletin 
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Station. "Tomatoes for the Early Market." 

COOPEKATIOX AXD FARMERS' ORGAXIZATIONS 

Annals of American Academy of Political and Social Science. 
July, 1913. 

Oregon Agricultural College Bulletin No. 71. 

Senate Document 992. Notes by Maurice F. Egan, on Den- 
mark. 

"Cooperation.'" A magazine published in ^Minneapolis. 

Nortli Anioi-ir-an Peview. June, 1913. 



(Jouperaiion in Agriculture, Marketing, and Rural Credit 99 

World's Work. Sept., 1912. (Wisconsin.) 

Metropolitan Magazine. Jan., 1914. (Denmark.) 

The Mission, History and Times of the Farmers' Union. Chas. 
S. Barrett. 

Senate Dociiincut 1071, 63rd Congress, 3rd Session. "The 
American Commission and Its Work."' 

Quarterly Journal of Economics. May, 1913. "Eenters' 
Union." 

American Society of Equity. "The Third Power." (J. A. 
Everitt, Indianapolis, Ind.) See Equity ISTews, Published at 
Madison, Wis. 

Farmers' Fireside and Bulletin. (Farmers' Educational and 
Cooperative Union.) Published at Arlington, Texas. 

RURAL CREDITS 

Boohs 

Yearbook of the United States Department of Agriculture, 

1912, p. 25. (Investigation of present credit conditions.) 
Yearbook of the United States Department of Agriculture, 

1913, p. 257. 

Principles of Eural Economics. T. N. Carver, p. 275. 

Marketing and Farm Credits. Cooperation Magazine, Minne- 
apolis, Minn. 

People's Banks. H. W. Wolff. P. S. King & Son, London. 

Reports and Pamphlets 

Banking Laws of Texas, Digest, 1913. Has the text of the 
Texas Rural Credit Law. Send to the Commissioner of Insur- 
ance and Banking. 

Credit Conditions in a Cotton State. L. H. Haney. Pub- 
lished in American Economic Eeview, March, 1914. Also as a 
separate pamphlet. 

Eeport of the Agricultural Credit Commission of the Province 
of Saskatchewan, Canada, 1913. 

Senate Document 251, Part I, GSrd Congress, 2nd Session. 
^'jSTeeds of the Ainerican Farmer." 



100 Bulletin of the University of 'Texas 

Senate Document 260, GSrd Congress, 3nd Session. (Fred. J. 
Haskin.) 

Agricultural Credit and Cooperation in Germany. Eeport to 
the British Board of Agriculture and Fisheries, by J. E. Cahill, 
Published in the United States as Senate Document 17, 63rd 
Congress, 1st Session. 

Senate Document 380, Parts 1 and 2; 63rd Congress, 2nd Ses- 
sion. Keport on European system with suggested legislation for 
United States. 

Senate Document 865, 62nd Congress, 2nd Session; European 
systems modified to meet United States' conditions. 

Senate Document 141, 63rd Congress, 1st Session. Davis plan 
of Eura-1 Banks. 

Hearings before the Sub-committee of the Committee on Bank- 
ing and Currency; House of Eepresentatives, Parts 1-23 — ready. 

Senate Document 1006; C. H. Davis; Eural Credit Plan for 
Virginia. 

Bulletin 289. University of Texas. 

Senate Document 158, 63rd Congress, 1st Session. Bill of 
Senator Fletcher on jSTational Eural Banking System. 

Senate Document 260, 63rd Congress, 1st Session; David 
Lubin's address on Eaiffeisen. 

Senate Document 380, Part TIT, 63rd Congress, 2nd Session; 
Personal or Short-Time Credit. 

A Cooperative Plan to Provide 5% Money for Farmers. Jobn 
Spruut Hill, Durham, ISTorth Carolina. 

Magazine Articles 

Farm and Eanch, April 19, 1913. "Texas Eural Credit Law.'' 
Progressive Farmer, Dallas, Texas, Feb. 28, 1911. "Symposium 
on Eural Credits." 



